-CITE-

26 USC CHAPTER 12 - GIFT TAX 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

-HEAD-

CHAPTER 12 - GIFT TAX

-MISC1-

Subchapter Sec.(!1)

A. Determination of Tax Liability 2501

B. Transfers 2511

C. Deductions 2521

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 529, 1015, 2001, 2012,

2035, 2207A, 2612, 2632, 2642, 2651, 2652, 2661, 2663, 2701, 6103,

6161, 6212, 6324, 6501, 6901, 6905, 7463, 7477, 7517, 7851, 7872 of

this title.

-FOOTNOTE-

(!1) Section numbers editorially supplied.

-End-

-CITE-

26 USC Subchapter A - Determination of Tax Liability 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter A - Determination of Tax Liability

-HEAD-

SUBCHAPTER A - DETERMINATION OF TAX LIABILITY

-MISC1-

Sec.

2501. Imposition of tax.

2502. Rate of tax.

2503. Taxable gifts.

2504. Taxable gifts for preceding calendar periods.

2505. Unified credit against gift tax.

AMENDMENTS

1981 - Pub. L. 97-34, title IV, Sec. 442(a)(4)(E), Aug. 13, 1981,

95 Stat. 321, substituted "preceding calendar periods" for

"preceding years and quarters" in item 2504.

1976 - Pub. L. 94-455, title XX, Sec. 2001(c)(2)(B)(i), Oct. 4,

1976, 90 Stat. 1853, added item 2505.

1970 - Pub. L. 91-614, title I, Sec. 102(a)(4)(B), Dec. 31, 1970,

84 Stat. 1840, substituted "Taxable gifts for preceding years and

quarters" for "Taxable gifts for preceding years" in item 2504.

-End-

-CITE-

26 USC Sec. 2501 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter A - Determination of Tax Liability

-HEAD-

Sec. 2501. Imposition of tax

-STATUTE-

(a) Taxable transfers

(1) General rule

A tax, computed as provided in section 2502, is hereby imposed

for each calendar year on the transfer of property by gift during

such calendar year by any individual resident or nonresident.

(2) Transfers of intangible property

Except as provided in paragraph (3), paragraph (1) shall not

apply to the transfer of intangible property by a nonresident not

a citizen of the United States.

(3) Exception

(A) Certain individuals

Paragraph (2) shall not apply in the case of a donor who,

within the 10-year period ending with the date of transfer,

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.

(B) Certain individuals treated as having tax avoidance purpose

For purposes of subparagraph (A), 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).

(C) Exception for certain individuals

Subparagraph (B) shall not apply to a donor meeting the

requirements of section 877(c)(1).

(D) Credit for foreign gift taxes

The tax imposed by this section solely by reason of this

paragraph shall be credited with the amount of any gift tax

actually paid to any foreign country in respect of any gift

which is taxable under this section solely by reason of this

paragraph.

(E) Cross reference

For comparable treatment of long-term lawful permanent

residents who ceased to be taxed as residents, see section

877(e).

(4) 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 paragraph (3), result in a substantial reduction for the

calendar year in the taxes on the transfer of property by gift,

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 such individual.

(5) Transfers to political organizations

Paragraph (1) shall not apply to the transfer of money or other

property to a political organization (within the meaning of

section 527(e)(1)) for the use of such organization.

(b) Certain residents of possessions considered citizens of the

United States

A donor who is a citizen of the United States and a resident of a

possession thereof 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.

(c) Certain residents of possessions considered nonresidents not

citizens of the United States

A donor who is a citizen of the United States and a resident of a

possession thereof 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 donor 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.

(d) Cross references

(1) For increase in basis of property acquired by gift for

gift tax paid, see section 1015(d).

(2) For exclusion of transfers of property outside the United

States by a nonresident who is not a citizen of the United

States, see section 2511(a).

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 403; Pub. L. 85-866, title I,

Secs. 43(b), 102(b), Sept. 2, 1958, 72 Stat. 1641, 1674; Pub. L.

86-779, Sec. 4(d), Sept. 14, 1960, 74 Stat. 1000; Pub. L. 89-809,

title I, Sec. 109(a), Nov. 13, 1966, 80 Stat. 1574; Pub. L. 91-614,

title I, Sec. 102(a)(1), Dec. 31, 1970, 84 Stat. 1838; Pub. L.

93-625, Sec. 14(a), Jan. 3, 1975, 88 Stat. 2121; Pub. L. 94-455,

title XIX, Secs. 1902(a)(10), 1906(b)(13)(A), Oct. 4, 1976, 90

Stat. 1805, 1834; Pub. L. 97-34, title IV, Sec. 442(a)(1), Aug. 13,

1981, 95 Stat. 320; Pub. L. 100-647, title III, Sec. 3031(a)(2),

Nov. 10, 1988, 102 Stat. 3635; Pub. L. 101-508, title XI, Sec.

11601(b)(2), Nov. 5, 1990, 104 Stat. 1388-490; Pub. L. 104-191,

title V, Sec. 511(e)(2), (f)(2)(B), Aug. 21, 1996, 110 Stat. 2098,

2100; Pub. L. 105-34, title XVI, Sec. 1602(g)(5), Aug. 5, 1997, 111

Stat. 1095.)

-MISC1-

AMENDMENTS

1997 - Subsec. (a)(3)(C). Pub. L. 105-34 substituted "donor" for

"decedent".

1996 - Subsec. (a)(3). Pub. L. 104-191, Sec. 511(e)(2),

substituted "Exception" for "Exceptions" in heading and amended

text generally. Prior to amendment, text read as follows:

"Paragraph (2) shall not apply in the case of a donor who at any

time after March 8, 1965, and within the 10-year period ending with

the date of transfer lost United States citizenship unless -

"(A) such donor's 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), or

"(B) such loss did not have for one of its principal purposes

the avoidance of taxes under this subtitle or subtitle A."

Subsec. (a)(3)(E). Pub. L. 104-191, Sec. 511(f)(2)(B), added

subpar. (E).

1990 - Subsec. (d)(3). Pub. L. 101-508 struck out par. (3) which

read as follows: "For treatment of certain transfers related to

estate tax valuation freezes as gifts to which this chapter

applies, see section 2036(c)(4)."

1988 - Subsec. (d)(3). Pub. L. 100-647 added par. (3).

1981 - Subsec. (a)(1), (4). Pub. L. 97-34 substituted "calendar

year" for "calendar quarter" wherever appearing.

1976 - Subsec. (a)(1). Pub. L. 94-455 inserted "for each calendar

quarter" after "hereby imposed" and struck out "For the first

calendar quarter of calendar year 1971 and each calendar quarter

thereafter" after "General rule-".

Subsec. (a)(4). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out

"or his delegate" after "Secretary".

1975 - Subsec. (a)(5). Pub. L. 93-625 added par. (5).

1970 - Subsec. (a)(1). Pub. L. 91-614, Sec. 102(a)(1)(A),

substituted "For the first calendar quarter of the calendar year

1971 and each calendar quarter thereafter" for "For the calendar

year 1955 and each calendar year thereafter" and "during such

calendar quarter" for "during such calendar year".

Subsec. (a)(4). Pub. L. 91-614, Sec. 102(a)(1)(B), substituted

"calendar quarter" for "calendar year".

1966 - Subsec. (a). Pub. L. 89-809 redesignated existing

provisions as par. (1), struck out ", except transfers of

intangible property by a nonresident not a citizen of the United

States and who was not engaged in business in the United States

during such calendar year" after "resident or nonresident", and

added pars. (2) to (4).

1960 - Subsec. (a). Pub. L. 86-779, Sec. 4(d)(2), struck out "who

is" before "not a citizen".

Subsecs. (c), (d). Pub. L. 86-779, Sec. 4(d)(1), added subsec.

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

1958 - Subsec. (b). Pub. L. 85-866, Sec. 102(b), added subsec.

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

Subsec. (c). Pub. L. 85-866, Sec. 102(b), redesignated former

subsec. (b) as (c) and Pub. L. 85-866, Sec. 43(b), made the heading

read in the plural, designated existing provisions as par. (2) and

added par. (1).

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 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 OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 applicable in cases where transfer

referred to in section 2036(c)(1)(B) of this title is on or after

June 21, 1988, see section 3031(h)(2) of Pub. L. 100-647, set out

as a note under section 2036 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 442(e) of Pub. L. 97-34 provided that: "The amendments

made by this section [amending this section and sections 1015,

2502, 2503, 2504, 2505, 2512, 2513, 2522, 6019, 6075, and 6212 of

this title] shall apply with respect to gifts made after December

31, 1981."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 1902(c)(2) 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 (10), (11), and

(12)(D) and (E) of subsection (a) [amending this section and

sections 2522 and 2523 of this title] shall apply with respect to

gifts made after December 31, 1976."

EFFECTIVE DATE OF 1975 AMENDMENT

Section 14(b) of Pub. L. 93-625 provided that: "The amendment

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

transfers made after May 7, 1974."

EFFECTIVE DATE OF 1970 AMENDMENT

Section 102(e) of Pub. L. 91-614 provided that: "The amendments

made by this section [amending this section and sections 1015,

2012, 2502, 2503, 2504, 2512, 2513, 2515, 2521, 2522, 2523, 6019,

6075, 6212, 6214, 6324, 6501, and 6512 of this title and enacting

provisions set out as a note under this section] shall apply with

respect to gifts made after December 31, 1970."

EFFECTIVE DATE OF 1966 AMENDMENT

Section 109(c) of Pub. L. 89-809 provided that: "The amendments

made by this section [amending this section and section 2511 of

this title] shall apply with respect to the calendar year 1967 and

all calendar years thereafter."

EFFECTIVE DATE OF 1960 AMENDMENT

Section 4(e)(3) of Pub. L. 86-779 provided that: "The amendments

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

respect to gifts made after the date of the enactment of this Act

[Sept. 14, 1960]."

EFFECTIVE DATE OF 1958 AMENDMENT

Amendment by Pub. L. 85-866 applicable to gifts made after

September 2, 1958, see section 102(d) of Pub. L. 85-866, set out as

a note under section 2011 of this title.

ELECTION TO HAVE AMENDMENTS BY TITLE IV OF THE ECONOMIC RECOVERY

TAX ACT OF 1981 NOT APPLY

Pub. L. 97-448, title I, Sec. 104(d)(3), Jan. 12, 1983, 96 Stat.

2383, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100

Stat. 2095, provided that:

"(A) In the case of any decedent -

"(i) who dies before August 13, 1984, and

"(ii) who made a gift (before August 13, 1981, and during the

3-year period ending on the date of the decedent's death) on

which tax imposed by chapter 12 of the Internal Revenue Code of

1986 [formerly I.R.C. 1954] has been paid before April 16, 1982,

such decedent's executor may make an election to have subtitle B of

such Code (relating to estate and gift taxes) applied with respect

to such decedent without regard to any of the amendments made by

title IV of the Economic Recovery Tax Act of 1981 [Pub. L. 97-34,

title IV].

"(B) An election under subparagraph (A) shall be made at such

time and in such manner as the Secretary of the Treasury or his

delegate shall prescribe.

"(C) An election under subparagraph (A), once made, shall be

irrevocable."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 305, 351, 877, 2056A,

2502, 2505, 2511, 2523, 2661 of this title.

-End-

-CITE-

26 USC Sec. 2502 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter A - Determination of Tax Liability

-HEAD-

Sec. 2502. Rate of tax

-STATUTE-

(a) Computation of tax

The tax imposed by section 2501 for each calendar year shall be

an amount equal to the excess of -

(1) a tentative tax, computed under section 2001(c), on the

aggregate sum of the taxable gifts for such calendar year and for

each of the preceding calendar periods, over

(2) a tentative tax, computed under such section, on the

aggregate sum of the taxable gifts for each of the preceding

calendar periods.

(b) Preceding calendar period

Whenever used in this title in connection with the gift tax

imposed by this chapter, the term "preceding calendar period" means

-

(1) calendar years 1932 and 1970 and all calendar years

intervening between calendar year 1932 and calendar year 1970,

(2) the first calendar quarter of calendar year 1971 and all

calendar quarters intervening between such calendar quarter and

the first calendar quarter of calendar year 1982, and

(3) all calendar years after 1981 and before the calendar year

for which the tax is being computed.

For purposes of paragraph (1), the term "calendar year 1932"

includes only that portion of such year after June 6, 1932.

(c) Tax to be paid by donor

The tax imposed by section 2501 shall be paid by the donor.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 403; Pub. L. 91-614, title I,

Sec. 102(a)(2), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 94-455, title

XX, Sec. 2001(b)(1), Oct. 4, 1976, 90 Stat. 1849; Pub. L. 97-34,

title IV, Sec. 442(a)(2), Aug. 13, 1981, 95 Stat. 320; Pub. L.

100-203, title X, Sec. 10401(b)(2)(B), Dec. 22, 1987, 101 Stat.

1330-431; Pub. L. 107-16, title V, Sec. 511(d), June 7, 2001, 115

Stat. 70.)

-STATAMEND-

AMENDMENT OF SUBSECTION (A)

Pub. L. 107-16, title V, Sec. 511(d), (f)(3), title IX, Sec. 901,

June 7, 2001, 115 Stat. 70, 71, 150, provided that, applicable to

gifts made after Dec. 31, 2009, subsection (a) of this section is

temporarily amended to read as follows:

(a) Computation of tax

(1) In general

The tax imposed by section 2501 for each calendar year shall be

an amount equal to the excess of -

(A) a tentative tax, computed under paragraph (2), on the

aggregate sum of the taxable gifts for such calendar year and

for each of the preceding calendar periods, over

(B) a tentative tax, computed under paragraph (2), on the

aggregate sum of the taxable gifts for each of the preceding

calendar periods.

(2) Rate schedule

If the amount with The tentative tax is:

respect to which the

tentative tax to be

computed is:

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

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

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

$20,000 $10,000.

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

$40,000 $20,000.

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

$60,000 $40,000.

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

$80,000 over $60,000.

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

$100,000 over $80,000.

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

$150,000 over $100,000.

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

$250,000 over $150,000.

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

$500,000 over $250,000.

Over $500,000 $155,800, plus 35% of the excess

over $500,000.

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

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

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

substituted "under section 2001(c)" for "in accordance with the

rate schedule set forth in section 2001(c)".

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

substituted "under such section" for "in accordance with such rate

schedule".

1981 - Subsec. (a). Pub. L. 97-34 substituted in introductory

text and par. (1) "calendar year" for "calendar quarter" and in

pars. (1) and (2) "calendar periods" for "calendar years and

calendar quarters".

Subsec. (b). Pub. L. 97-34 substituted definition of "preceding

calendar period" for "calendar quarter", the latter including only

the first calendar quarter of the calendar year 1971 and succeeding

calendar quarters (covered in par. (2)), the former incorporating

former subsec. (c)(1) definition of "preceding calendar years" as

meaning calendar years 1932 and 1970 and all calendar years

intervening between calendar year 1932 and calendar year 1970 and

"calendar year 1932" as including only the portion of such year

after June 6, 1932, and former subsec. (c)(2) definition of

"preceding calendar quarters" as meaning the first calendar quarter

of calendar year 1971 and all calendar quarters intervening between

such calendar quarter and the calendar quarter for which the tax is

being computed.

Subsecs. (c), (d). Pub. L. 97-34 redesignated subsec. (d) as (c).

Former subsec. (c), defining "preceding calendar years" and

"preceding calendar quarters", was incorporated in subsec. (b).

1976 - Subsec. (a). Pub. L. 94-455 inserted "tentative" after

"(1) a" and "(2) a" and substituted in par. (1) "section 2001(c)"

for "this subsection" after "set forth in".

1970 - Subsec. (a). Pub. L. 91-614, Sec. 102(a)(2)(A),

substituted a computation of tax formula based on the current

calendar quarter, preceding calendar quarters, and preceding

calendar years for a formula based entirely on the current and

preceding calendar years.

Subsec. (b). Pub. L. 91-614, Sec. 102(a)(2)(B), substituted

definition of "calendar quarter" for definition of "calendar year".

Subsec. (c). Pub. L. 91-614, Sec. 102(a)(2)(B), substituted

definition of "preceding calendar years and quarters" for

definition of "preceding calendar years".

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title V, Sec. 511(f)(3), June 7, 2001, 115 Stat.

71, provided that: "The amendments made by subsections (d) and (e)

[amending this section and section 2511 of this title] shall apply

to gifts made after December 31, 2009."

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 1987 AMENDMENT

Amendment by Pub. L. 100-203 applicable in the case of decedents

dying, and gifts made, after Dec. 31, 1987, see section 10401(c) of

Pub. L. 100-203, set out as a note under section 2001 of this

title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable with respect to gifts made

after Dec. 31, 1981, see section 442(e) of Pub. L. 97-34, set out

as a note under section 2501 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2001(d)(2) of Pub. L. 94-455 provided that: "The

amendments made by subsections (b) and (c)(2) [enacting section

2505 of this title, amending this section and section 2504 of this

title, and repealing section 2521 of this title] shall apply to

gifts made after December 31, 1976."

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, 2501, 2504, 2505 of

this title.

-End-

-CITE-

26 USC Sec. 2503 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter A - Determination of Tax Liability

-HEAD-

Sec. 2503. Taxable gifts

-STATUTE-

(a) General definition

The term "taxable gifts" means the total amount of gifts made

during the calendar year, less the deductions provided in

subchapter C (section 2522 and following).

(b) Exclusions from gifts

(1) In general

In the case of gifts (other than gifts of future interests in

property) made to any person by the donor during the calendar

year, the first $10,000 of such gifts to such person shall not,

for purposes of subsection (a), be included in the total amount

of gifts made during such year. Where there has been a transfer

to any person of a present interest in property, the possibility

that such interest may be diminished by the exercise of a power

shall be disregarded in applying this subsection, if no part of

such interest will at any time pass to any other person.

(2) Inflation adjustment

In the case of gifts made in a calendar year after 1998, the

$10,000 amount contained in paragraph (1) shall be increased by

an amount equal to -

(A) $10,000, 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 $1,000, such amount shall be rounded to the next

lowest multiple of $1,000.

(c) Transfer for the benefit of minor

No part of a gift to an individual who has not attained the age

of 21 years on the date of such transfer shall be considered a gift

of a future interest in property for purposes of subsection (b) if

the property and the income therefrom -

(1) may be expended by, or for the benefit of, the donee before

his attaining the age of 21 years, and

(2) will to the extent not so expended -

(A) pass to the donee on his attaining the age of 21 years,

and

(B) in the event the donee dies before attaining the age of

21 years, be payable to the estate of the donee or as he may

appoint under a general power of appointment as defined in

section 2514(c).

[(d) Repealed. Pub. L. 97-34, title III, Sec. 311(h)(5), Aug. 13,

1981, 95 Stat. 282]

(e) Exclusion for certain transfers for educational expenses or

medical expenses

(1) In general

Any qualified transfer shall not be treated as a transfer of

property by gift for purposes of this chapter.

(2) Qualified transfer

For purposes of this subsection, the term "qualified transfer"

means any amount paid on behalf of an individual -

(A) as tuition to an educational organization described in

section 170(b)(1)(A)(ii) for the education or training of such

individual, or

(B) to any person who provides medical care (as defined in

section 213(d)) with respect to such individual as payment for

such medical care.

(f) Waiver of certain pension rights

If any individual waives, before the death of a participant, any

survivor benefit, or right to such benefit, under section

401(a)(11) or 417, such waiver shall not be treated as a transfer

of property by gift for purposes of this chapter.

(g) Treatment of certain loans of artworks

(1) In general

For purposes of this subtitle, any loan of a qualified work of

art shall not be treated as a transfer (and the value of such

qualified work of art shall be determined as if such loan had not

been made) if -

(A) such loan is to an organization described in section

501(c)(3) and exempt from tax under section 501(c) (other than

a private foundation), and

(B) the use of such work by such organization is related to

the purpose or function constituting the basis for its

exemption under section 501.

(2) Definitions

For purposes of this section -

(A) Qualified work of art

The term "qualified work of art" means any archaeological,

historic, or creative tangible personal property.

(B) Private foundation

The term "private foundation" has the meaning given such term

by section 509, except that such term shall not include any

private operating foundation (as defined in section

4942(j)(3)).

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 404; Pub. L. 91-614, title I,

Sec. 102(a)(3), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 95-600, title

VII, Sec. 702(j)(2), Nov. 6, 1978, 92 Stat. 2931; Pub. L. 97-34,

title III, Sec. 311(h)(5), title IV, Secs. 441(a), (b), 442(a)(3),

Aug. 13, 1981, 95 Stat. 282, 319, 320; Pub. L. 99-514, title XVIII,

Sec. 1898(h)(1)(B), Oct. 22, 1986, 100 Stat. 2957; Pub. L. 100-647,

title I, Sec. 1018(s)(2)(A), (u)(52), Nov. 10, 1988, 102 Stat.

3586, 3593; Pub. L. 101-239, title VII, Sec. 7811(m)(1), Dec. 19,

1989, 103 Stat. 2412; Pub. L. 105-34, title V, Sec. 501(c), Aug. 5,

1997, 111 Stat. 846.)

-STATAMEND-

ADJUSTMENT OF ANNUAL EXCLUSION FOR GIFTS IN CALENDAR YEAR 2003

For adjustment of dollar amounts of gifts not includible in total

amount of taxable gifts under this section for calendar year 2003,

see section 3.24 of Revenue Procedure 2002-70, set out as a note

under section 1 of this title.

-MISC1-

AMENDMENTS

1997 - Subsec. (b). Pub. L. 105-34 designated existing provisions

as par. (1), inserted par. heading, realigned margins, and added

par. (2).

1989 - Subsecs. (f), (g). Pub. L. 101-239 redesignated subsec.

(f), relating to treatment of certain loans of artworks, as (g).

1988 - Subsec. (e)(2)(B). Pub. L. 100-647, Sec. 1018(u)(52),

substituted "section 213(d)" for "section 213(e)".

Subsec. (f). Pub. L. 100-647, Sec. 1018(s)(2)(A), added subsec.

(f) relating to treatment of certain loans of artworks.

1986 - Subsec. (f). Pub. L. 99-514 added subsec. (f).

1981 - Subsec. (a). Pub. L. 97-34, Sec. 442(a)(3)(A), substituted

"the total amount of gifts made during the calendar year, less the

deductions provided in subchapter C (section 2522 and following)"

for ", in the case of gifts made after December 31, 1970, the total

amount of gifts made during calendar quarter, less the deductions

provided in subchapter C (sec. 2521 and following" and struck out

provision that in the case of gifts made before Jan. 1, 1971,

"taxable gifts" means the total amount of gifts made during the

calendar year, less the deductions provided in subchapter C.

Subsec. (b). Pub. L. 97-34, Sec. 442(a)(3)(B), substituted

provision that in the case of gifts, other than gifts of future

interests in property, made to any person by the donor during the

calendar year, the first $10,000 of such gifts to such person shall

not, for purposes of subsec. (a), be included in the total amount

of gifts made during such year for provision that in computing

taxable gifts for the calendar quarter, in the case of gifts, other

than gifts of future interests in property, made to any person by

the donor during the calendar year 1971 and subsequent calendar

years, $10,000 of such gifts to such person less the aggregate of

the amounts of such gifts to such person during all preceding

calendar quarters of the calendar year shall not, for purposes of

subsec. (a), be included in the total amount of gifts made during

such quarter.

Pub. L. 97-34, Sec. 441(a), substituted "$10,000" for "$3,000".

Subsec. (d). Pub. L. 97-34, Sec. 311(h)(5), repealed subsec. (d)

which related to individual retirement accounts, etc., for spouse.

Subsec. (e). Pub. L. 97-34, Sec. 441(b), added subsec. (e).

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

1970 - Subsec. (a). Pub. L. 91-614, Sec. 102(a)(3)(A), divided

definition of "taxable gifts" into gifts made after Dec. 31, 1970,

where taxable gifts are based on the total amount of gifts made

during the calendar quarter, less the applicable deductions, and

gifts made before Jan. 1, 1971, where taxable gifts are based on

the total amount of gifts made during the calendar year, less the

applicable deductions.

Subsec. (b). Pub. L. 91-614, Sec. 102(a)(3)(B), substituted

provisions with regard to computing taxable gifts for the calendar

quarter, in the case of gifts made to any persons by the donor

during the calendar year 1971 and subsequent calendar years, $3,000

of such gifts to such person less the aggregate of the amounts of

such gifts to such person during all preceding calendar quarters of

the calendar year shall not be included in the total amount of

gifts made during such quarter for provisions requiring in the case

of gifts made to any person by the donor during the calendar year

1955 and subsequent calendar years, the first $3,000 of such gifts

to such person shall not be included in the total amount of gifts

made during such year.

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 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 1018(s)(2)(B) of Pub. L. 100-647 provided that: "The

amendment made by subparagraph (A) [amending this section] shall

apply to loans after July 31, 1969."

Amendment by section 1018(u)(52) of Pub. L. 100-647 effective,

except as otherwise provided, as if included in the provision of

the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment

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

under section 1 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 effective as if included in the

provision of the Retirement Equity Act of 1984, Pub. L. 98-397, to

which such amendment relates, except as otherwise provided, see

section 1898(j) of Pub. L. 99-514, set out as a note under section

401 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by section 311(h)(5) 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.

Section 441(c) of Pub. L. 97-34, as amended by Pub. L. 99-514,

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

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

amendments made by this section [amending this section] shall apply

to transfers after December 31, 1981.

"(2) Transitional rule. - If -

"(A) an instrument executed before the date which is 30 days

after the date of the enactment of this Act [Aug. 13, 1981]

provides for a power of appointment which may be exercised during

any period after December 31, 1981,

"(B) such power of appointment is expressly defined in terms

of, or by reference to, the amount of the gift tax exclusion

under section 2503(b) of the Internal Revenue Code of 1986

[formerly I.R.C. 1954] (or the corresponding provision of prior

law),

"(C) the instrument described in subparagraph (A) has not been

amended on or after the date which is 30 days after the date of

the enactment of this Act [Aug. 13, 1981], and

"(D) the State has not enacted a statute applicable to such

gift under which such power of appointment is to be construed as

being defined in terms of, or by reference to, the amount of the

exclusion under such section 2503(b) after its amendment by

subsection (a),

then the amendment made by subsection (a) shall not apply to such

gift."

Amendment by section 442(a)(3) of Pub. L. 97-34 applicable with

respect to gifts made after Dec. 31, 1981, see section 442(e) of

Pub. L. 97-34, set out as a note under section 2501 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

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

amendment made by paragraph (2) [amending this section] shall apply

to transfers made after December 31, 1976."

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.

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 529, 672, 1015, 2001,

2012, 2057, 2101, 2523, 2611, 2632, 2642, 2701, 6019, 6039F, 6501

of this title.

-End-

-CITE-

26 USC Sec. 2504 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter A - Determination of Tax Liability

-HEAD-

Sec. 2504. Taxable gifts for preceding calendar periods

-STATUTE-

(a) In general

In computing taxable gifts for preceding calendar periods for

purposes of computing the tax for any calendar year -

(1) there shall be treated as gifts such transfers as were

considered to be gifts under the gift tax laws applicable to the

calendar period in which the transfers were made,

(2) there shall be allowed such deductions as were provided for

under such laws, and

(3) the specific exemption in the amount (if any) allowable

under section 2521 (as in effect before its repeal by the Tax

Reform Act of 1976) shall be applied in all computations in

respect of preceding calendar periods ending before January 1,

1977, for purposes of computing the tax for any calendar year.

(b) Exclusions from gifts for preceding calendar periods

In the case of gifts made to any person by the donor during

preceding calendar periods, the amount excluded, if any, by the

provisions of gift tax laws applicable to the periods in which the

gifts were made shall not, for purposes of subsection (a), be

included in the total amount of the gifts made during such

preceding calendar periods.

(c) Valuation of gifts

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

be assessed under this chapter 12 (or under corresponding

provisions of prior laws) on -

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

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

(2) 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 (within the

meaning of section 2001(f)(2)) for purposes of this chapter.

(d) Net gifts

The term "net gifts" as used in the corresponding provisions of

prior laws shall be read as "taxable gifts" for purposes of this

chapter.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 405; Pub. L. 91-614, title I,

Sec. 102(a)(4)(A), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 94-455,

title XX, Sec. 2001(c)(2)(A), Oct. 4, 1976, 90 Stat. 1853; Pub. L.

97-34, title IV, Sec. 442(a)(4)(A)-(D), Aug. 13, 1981, 95 Stat.

321; Pub. L. 105-34, title V, Sec. 506(d), Aug. 5, 1997, 111 Stat.

856; Pub. L. 105-206, title VI, Sec. 6007(e)(2)(B)[(C)], July 22,

1998, 112 Stat. 810.)

-REFTEXT-

REFERENCES IN TEXT

The Tax Reform Act of 1976, referred to in subsec. (a)(3), is

Pub. L. 94-455, Oct. 4, 1976, 90 Stat. 1520, as amended. Section

2521 of this title was repealed by section 2001(b)(3) of Pub. L.

94-455. For complete classification of this Act to the Code, see

Tables.

-MISC1-

AMENDMENTS

1998 - Subsec. (c). Pub. L. 105-206 substituted "gifts" for

"certain gifts for preceding calendar periods" in heading and

amended text generally. Prior to amendment, text read as follows:

"If the time has expired within which a tax may be assessed under

this chapter 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), the value of such gift made

in such preceding calendar period shall, for purposes of computing

the tax under this chapter for any calendar year, be the value of

such gift which was used in computing the tax for the last

preceding calendar period for which a tax under this chapter or

under corresponding provisions of prior laws was assessed or paid."

1997 - Subsec. (c). Pub. L. 105-34 struck out ", and if a tax

under this chapter or under corresponding provisions of prior laws

has been assessed or paid for such preceding calendar period" after

"as defined in section 2502(b)".

1981 - Pub. L. 97-34, Sec. 442(a)(4)(D), substituted "calendar

periods" for "years and quarters" in section catchline.

Subsec. (a). Pub. L. 97-34, Sec. 442(a)(4)(A), substituted in

introductory text "preceding calendar periods" and "calendar year"

for "preceding calendar years or calendar quarters" and "calendar

quarter", incorporated existing text in provisions designated pars.

(1) to (3), and substituted in par. (1) "calendar period" for

"years or calendar quarters" and in par. (3) "preceding calendar

periods" and "calendar year" for "calendar years or calendar

quarters" and "calendar quarter".

Subsec. (b). Pub. L. 97-34, Sec. 442(a)(4)(B), substituted in

heading "calendar periods" for "years and quarters" and in text

"preceding calendar periods" for "preceding calendar years and

calendar quarters", "the periods" for "the years and calendar

quarters", and "such preceding calendar periods" for "such years

and calendar quarters".

Subsec. (c). Pub. L. 97-34, Sec. 442(a)(4)(C), substituted in

heading "calendar periods" for "calendar years and quarters" and in

text "preceding calendar period" for "preceding calendar year or

calendar quarter" in four places, "any calendar year" for "any

calendar quarter", and "section 2502(b)" for "section 2502(c)".

1976 - Subsec. (a). Pub. L. 94-455 inserted "(as in effect before

its repeal by the Tax Reform Act of 1976)" after "section 2521" and

"ending before January 1, 1977" after "years or calendar quarters"

and substituted "of" for "to previous" after "computations in

respect".

1970 - Pub. L. 91-614 substituted "Taxable gifts for preceding

years and quarters" for "Taxable gifts for preceding years" in

section catchline.

Subsec. (a). Pub. L. 91-614 substituted "In computing taxable

gifts for the preceding calendar years or calendar quarters for the

purpose of computing the tax for any calendar quarter," for "In

computing taxable gifts for the calendar year 1954 and preceding

calendar years for the purpose of computing the tax for the

calendar year 1955 or any calendar year thereafter," provided that

the laws applicable in the calendar quarters as well as the years

in which the transfers in question were made shall apply, and

substituted "previous calendar years or calendar quarters for the

purpose of computing the tax for any calendar year or calendar

quarter" for "the calendar year 1954 and previous calendar years

for the purpose of computing the tax for the calendar year 1955 or

any calendar year thereafter".

Subsec. (b). Pub. L. 91-614 inserted reference to calendar

quarters in heading, substituted "during preceding calendar years

and calendar quarters," for "during the calendar year 1954 and

preceding calendar years," made reference to the amount excluded by

gift tax laws applicable to the calendar quarters as well as years

in which the gifts were made, and substituted "during such years

and calendar quarters" for "during such year".

Subsec. (c). Pub. L. 91-614 inserted reference to calendar

quarters in heading, inserted "or calendar quarter" after "calendar

year" in four places, and substituted "for any calendar quarter,"

for "for the calendar year 1955 and subsequent calendar years,".

Subsec. (d). Pub. L. 91-614 struck out "For years before the

calendar year 1955" from explanation of term "net gifts" as used in

corresponding provisions of prior laws.

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 gifts made after Aug.

5, 1997, see section 506(e)(1) of Pub. L. 105-34, as amended, set

out as a note under section 2001 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable with respect to gifts made

after Dec. 31, 1981, see section 442(e) of Pub. L. 97-34, set out

as a note under section 2501 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.

-End-

-CITE-

26 USC Sec. 2505 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter A - Determination of Tax Liability

-HEAD-

Sec. 2505. Unified credit against gift tax

-STATUTE-

(a) General rule

In the case of a citizen or resident of the United States, there

shall be allowed as a credit against the tax imposed by section

2501 for each calendar year an amount equal to -

(1) the applicable credit amount in effect under section

2010(c) for such calendar year (determined as if the applicable

exclusion amount were $1,000,000), reduced by

(2) the sum of the amounts allowable as a credit to the

individual under this section for all preceding calendar periods.

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

The amount 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 individual after September 8, 1976.

(c) Limitation based on amount of tax

The amount of the credit allowed under subsection (a) for any

calendar year shall not exceed the amount of the tax imposed by

section 2501 for such calendar year.

-SOURCE-

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

Stat. 1849; amended Pub. L. 97-34, title IV, Secs. 401(b),

442(a)(5), Aug. 13, 1981, 95 Stat. 299, 321; Pub. L. 101-508, title

XI, Sec. 11801(a)(40), (c)(19)(B), Nov. 5, 1990, 104 Stat.

1388-521, 1388-528; Pub. L. 105-34, title V, Sec. 501(a)(2), Aug.

5, 1997, 111 Stat. 845; Pub. L. 107-16, title V, Sec. 521(b), 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.

Pub. L. 107-16, title V, Sec. 521(b)(2), (e)(2), title IX, Sec.

901, June 7, 2001, 115 Stat. 71, 72, 150, provided that, applicable

to gifts made after Dec. 31, 2009, subsection (a)(1) of this

section is temporarily amended to read as follows:

"(1) the amount of the tentative tax which would be determined

under the rate schedule set forth in section 2502(a)(2) if the

amount with respect to which such tentative tax is to be computed

were $1,000,000, reduced by".

-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. Section 2521 of

this title was repealed by section 2001(b)(3) of Pub. L. 94-455.

For complete classification of this Act to the Code, see Tables.

-MISC1-

AMENDMENTS

2001 - Subsec. (a)(1). Pub. L. 107-16, Secs. 521(b)(1), 901,

temporarily inserted "(determined as if the applicable exclusion

amount were $1,000,000)" after "calendar year". See Effective and

Termination Dates of 2001 Amendment note below.

1997 - Subsec. (a)(1). Pub. L. 105-34 substituted "the applicable

credit amount in effect under section 2010(c) for such calendar

year" for "$192,800".

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

(c) and (d) as subsecs. (b) and (c), respectively, and struck out

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

credit against gift tax.

1981 - Subsec. (a). Pub. L. 97-34, Sec. 442(a)(5)(A), substituted

in provision preceding par. (1) "year" for "quarter", and "periods"

for "quarters" in par. (2).

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

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

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

heading "$47,000" before "credit", substituted subsec. (a)(1)

substitutions for "$192,800" of amounts of "$62,800", "$79,300",

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

1982, 1983, 1984, 1985, and 1986, respectively, for subsec. (a)(1)

substitutions for "$47,000" of amounts of "$6,000", "$30,000",

"$34,000", "$38,000", and "$42,500" in the case of gifts made after

Dec. 31, 1976, and before July 1, 1977, after June 30, 1977, and

before Jan. 1, 1978; after Dec. 31, 1977, and before Jan. 1, 1979,

after Dec. 31, 1978, and before Jan. 1, 1980, and after Dec. 31,

1979, and before Jan. 1, 1981, respectively.

Subsec. (d). Pub. L. 97-34, Sec. 442(a)(5)(B), substituted "year"

for "quarter" in two places.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Amendment by section 521(b)(1) of Pub. L. 107-16 applicable to

estates of decedents dying, and gifts made, after Dec. 31, 2001,

and amendment by section 521(b)(2) of Pub. L. 107-16 applicable to

gifts made after Dec. 31, 2009, see section 521(e)(1), (2) 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 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)(2) of Pub. L. 97-34 provided that: "The amendments

made by subsection (b) [amending this section] shall apply to gifts

made after such date [Dec. 31, 1981]."

Amendment by section 442(a)(5) of Pub. L. 97-34 applicable with

respect to gifts made after Dec. 31, 1981, see section 442(e) of

Pub. L. 97-34, set out as a note under section 2501 of this title.

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 2056A, 2102 of this

title.

-End-

-CITE-

26 USC Subchapter B - Transfers 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

SUBCHAPTER B - TRANSFERS

-MISC1-

Sec.

2511. Transfers in general.

2512. Valuation of gifts.

2513. Gift by husband or wife to third party.

2514. Powers of appointment.

2515. Treatment of generation-skipping transfer tax.

[2515A. Repealed.]

2516. Certain property settlements.

[2517. Repealed.]

2518. Disclaimers.

2519. Dispositions of certain life estates.

AMENDMENTS

1986 - Pub. L. 99-514, title XIV, Sec. 1432(d)(2), title XVIII,

Sec. 1852(e)(2)(B), Oct. 22, 1986, 100 Stat. 2730, 2868, added item

2515 and struck out item 2517 "Certain annuities under qualified

plans".

1981 - Pub. L. 97-34, title IV, Sec. 403(c)(3)(C), (d)(3)(B)(ii),

Aug. 13, 1981, 95 Stat. 302, 304, as amended Pub. L. 97-448, title

I, Sec. 104(a)(3)(B), Jan. 12, 1983, 96 Stat. 2380, struck out

items 2515 "Tenancies by the entirety in real property" and 2515A

"Tenancies by the entirety in personal property" and added item

2519.

1978 - Pub. L. 95-600, title VII, Sec. 702(k)(1)(C), Nov. 6,

1978, 92 Stat. 2932, substituted in item 2515 "Tenancies by the

entirety in real property" for "Tenancies by the entirety" and

added item 2515A.

1976 - Pub. L. 94-455, title XX, Sec. 2009(b)(3)(A), Oct. 4,

1976, 90 Stat. 1894, added item 2518.

1958 - Pub. L. 85-866, title I, Sec. 68(b), Sept. 2, 1958, 72

Stat. 1659, added item 2517.

-End-

-CITE-

26 USC Sec. 2511 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2511. Transfers in general

-STATUTE-

(a) Scope

Subject to the limitations contained in this chapter, the tax

imposed by section 2501 shall apply whether the transfer is in

trust or otherwise, whether the gift is direct or indirect, and

whether the property is real or personal, tangible or intangible;

but in the case of a nonresident not a citizen of the United

States, shall apply to a transfer only if the property is situated

within the United States.

(b) Intangible property

For purposes of this chapter, in the case of a nonresident not a

citizen of the United States who is excepted from the application

of section 2501(a)(2) -

(1) shares of stock issued by a domestic corporation, and

(2) debt obligations of -

(A) a United States person, or

(B) the United States, a State or any political subdivision

thereof, or the District of Columbia,

which are owned and held by such nonresident shall be deemed to be

property situated within the United States.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 406; Pub. L. 89-809, title I,

Sec. 109(b), Nov. 13, 1966, 80 Stat. 1575; Pub. L. 107-16, title V,

Sec. 511(e), June 7, 2001, 115 Stat. 71; Pub. L. 107-147, title IV,

Sec. 411(g)(1), Mar. 9, 2002, 116 Stat. 46.)

-STATAMEND-

AMENDMENT OF SECTION

Pub. L. 107-147, title IV, Sec. 411(g)(1), (x), Mar. 9, 2002, 116

Stat. 46, 53, provided that, 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,

subsection (c) of this section is amended by striking "taxable gift

under section 2503," and inserting "transfer of property by gift,".

Pub. L. 107-16, title V, Sec. 511(e), (f)(3), title IX, Sec. 901,

June 7, 2001, 115 Stat. 71, 150, provided that, applicable to gifts

made after Dec. 31, 2009, this section is temporarily amended by

adding at the end the following new subsection:

(c) Treatment of certain transfers in trust

Notwithstanding any other provision of this section and except as

provided in regulations, a transfer in trust shall be treated as a

taxable gift under section 2503, unless the trust is treated as

wholly owned by the donor or the donor's spouse under subpart E of

part I of subchapter J of chapter 1.

See Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

1966 - Subsec. (b). Pub. L. 89-809 inserted reference to

nonresidents who are excepted from the application of section

2501(a)(2) and expanded section to include debt obligations of

United States persons or the United States, a State or any

political subdivision thereof, or the District of Columbia.

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 gifts made after Dec.

31, 2009, see section 511(f)(3) of Pub. L. 107-16, set out as a

note under section 2502 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 calendar

year 1967 and all calendar years thereafter, see section 109(c) of

Pub. L. 89-809, 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 2101, 2501 of this title.

-End-

-CITE-

26 USC Sec. 2512 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2512. Valuation of gifts

-STATUTE-

(a) If the gift is made in property, the value thereof at the

date of the gift shall be considered the amount of the gift.

(b) Where property is transferred for less than an adequate and

full consideration in money or money's worth, then the amount by

which the value of the property exceeded the value of the

consideration shall be deemed a gift, and shall be included in

computing the amount of gifts made during the calendar year.

(c) Cross reference

For individual's right to be furnished on request a statement

regarding any valuation made by the Secretary of a gift by that

individual, see section 7517.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 406; Pub. L. 91-614, title I,

Sec. 102(b)(1), Dec. 31, 1970, 84 Stat. 1840; Pub. L. 94-455, title

XX, Sec. 2008(a)(2)(B), Oct. 4, 1976, 90 Stat. 1891; Pub. L. 97-34,

title IV, Sec. 442(b)(1), Aug. 13, 1981, 95 Stat. 322.)

-MISC1-

AMENDMENTS

1981 - Subsec. (b). Pub. L. 97-34 substituted "calendar year" for

"calendar quarters".

1976 - Subsec. (c). Pub. L. 94-455 added subsec. (c).

1970 - Subsec. (b). Pub. L. 91-614 substituted "calendar quarter"

for "calendar year".

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable with respect to gifts made

after Dec. 31, 1981, see section 442(e) of Pub. L. 97-34, set out

as a note under section 2501 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.

-End-

-CITE-

26 USC Sec. 2513 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2513. Gift by husband or wife to third party

-STATUTE-

(a) Considered as made one-half by each

(1) In general

A gift made by one spouse to any person other than his spouse

shall, for the purposes of this chapter, be considered as made

one-half by him and one-half by his spouse, but only if at the

time of the gift each spouse is a citizen or resident of the

United States. This paragraph shall not apply with respect to a

gift by a spouse of an interest in property if he creates in his

spouse a general power of appointment, as defined in section

2514(c), over such interest. For purposes of this section, an

individual shall be considered as the spouse of another

individual only if he is married to such individual at the time

of the gift and does not remarry during the remainder of the

calendar year.

(2) Consent of both spouses

Paragraph (1) shall apply only if both spouses have signified

(under the regulations provided for in subsection (b)) their

consent to the application of paragraph (1) in the case of all

such gifts made during the calendar year by either while married

to the other.

(b) Manner and time of signifying consent

(1) Manner

A consent under this section shall be signified in such manner

as is provided under regulations prescribed by the Secretary.

(2) Time

Such consent may be so signified at any time after the close of

the calendar year in which the gift was made, subject to the

following limitations -

(A) The consent may not be signified after the 15th day of

April following the close of such year, unless before such 15th

day no return has been filed for such year by either spouse, in

which case the consent may not be signified after a return for

such year is filed by either spouse.

(B) The consent may not be signified after a notice of

deficiency with respect to the tax for such year has been sent

to either spouse in accordance with section 6212(a).

(c) Revocation of consent

Revocation of a consent previously signified shall be made in

such manner as in provided under regulations prescribed by the

Secretary, but the right to revoke a consent previously signified

with respect to a calendar year -

(1) shall not exist after the 15th day of April following the

close of such year if the consent was signified on or before such

15th day; and

(2) shall not exist if the consent was not signified until

after such 15th day.

(d) Joint and several liability for tax

If the consent required by subsection (a)(2) is signified with

respect to a gift made in any calendar year, the liability with

respect to the entire tax imposed by this chapter of each spouse

for such year shall be joint and several.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 406; Pub. L. 91-614, title I,

Sec. 102(b)(2), Dec. 31, 1970, 84 Stat. 1840; Pub. L. 94-455, title

XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L.

97-34, title IV, Sec. 442(b)(2), Aug. 13, 1981, 95 Stat. 322.)

-MISC1-

AMENDMENTS

1981 - Subsec. (a)(1), (2). Pub. L. 97-34, Sec. 442(b)(2)(A),

substituted "calendar year" for "calendar quarter".

Subsec. (b)(2). Pub. L. 97-34, Sec. 442(b)(2)(B)-(D), in

introductory text, substituted "calendar year" for "calendar

quarter", in subpar. (A), substituted "The consent" for "the

consent", "15th day of April following the close of such year" for

"15th day of the second month following the close of such calendar

quarter", and "such year" for "such calendar quarter" in two other

places, and in subpar. (B) substituted "The consent" and "such

year" for "the consent" and "such calendar quarter".

Subsec. (c). Pub. L. 97-34, Sec. 442(b)(2)(E), in provision

preceding par. (1) substituted "calendar year" for "calendar

quarter" and in par. (1) "15th day of April following the close of

such year" for "15th day of the second month following the close of

such quarter".

Subsec. (d). Pub. L. 97-34, Sec. 442(b)(2)(F), substituted "any

calendar year" and "such year" for "any calendar quarter" and "such

calendar quarter".

1976 - Subsecs. (b)(1), (c). Pub. L. 94-455 struck out "or his

delegate" after "Secretary".

1970 - Subsecs. (a), (b)(2). Pub. L. 91-614, Sec. 102(b)(2)(A),

substituted "calendar quarter" for "calendar year".

Subsec. (b)(2)(A). Pub. L. 91-614, Sec. 102(b)(2)(B), substituted

"the 15th day of the second month" for "the 15th day of April" and

substituted "such calendar quarter" for "such year".

Subsec. (b)(2)(B). Pub. L. 91-614, Sec. 102(b)(2)(C), substituted

"such calendar quarter" for "such year".

Subsec. (c). Pub. L. 91-614, Sec. 102(b)(2)(A), substituted

"calendar quarter" for "calendar year".

Subsec. (c)(1). Pub. L. 91-614, Sec. 102(b)(2)(D), substituted

"15th day of the second month following the close of such calendar

quarter" for "15th day of April following the close of such year".

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

"calendar quarter" for "calendar year" and "such calendar quarter"

for "such year".

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable with respect to gifts made

after Dec. 31, 1981, see section 442(e) of Pub. L. 97-34, set out

as a note under section 2501 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 1015, 2001, 2012, 2642,

2652, 6103 of this title.

-End-

-CITE-

26 USC Sec. 2514 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2514. Powers of appointment

-STATUTE-

(a) Powers created on or before October 21, 1942

An exercise of a general power of appointment created on or

before October 21, 1942, shall be deemed a transfer of property by

the individual possessing such power; 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

subsequent exercise of such power shall not be deemed to be the

exercise of a general power of appointment if -

(1) such partial release occurred before November 1, 1951, or

(2) 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 six months after the termination of such

legal disability.

(b) Powers created after October 21, 1942

The exercise or release of a general power of appointment created

after October 21, 1942, shall be deemed a transfer of property by

the individual possessing such power.

(c) Definition of general power of appointment

For purposes of this section, the term "general power of

appointment" means a power which is exercisable in favor of the

individual possessing the power (hereafter in this subsection

referred to as the "possessor"), his estate, his creditors, or the

creditors of his estate; except that -

(1) A power to consume, invade, or appropriate property for the

benefit of the possessor which is limited by an ascertainable

standard relating to the health, education, support, or

maintenance of the possessor shall not be deemed a general power

of appointment.

(2) A power of appointment created on or before October 21,

1942, which is exercisable by the possessor only in conjunction

with another person shall not be deemed a general power of

appointment.

(3) In the case of a power of appointment created after October

21, 1942, which is exercisable by the possessor only in

conjunction with another person -

(A) if the power is not exercisable by the possessor except

in conjunction with the creator of the power - such power shall

not be deemed a general power of appointment;

(B) if the power is not exercisable by the possessor 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 possessor - such power shall not

be deemed a general power of appointment. For the purposes of

this subparagraph a person who, after the death of the

possessor, may be possessed of a power of appointment (with

respect to the property subject to the possessor'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 possessor's power;

(C) if (after the application of subparagraphs (A) and (B))

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 possessor) in favor of whom such

power is exercisable.

For purposes of subparagraphs (B) and (C), 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.

(d) Creation of another power in certain cases

If a power of appointment created after October 21, 1942, is

exercised 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 the property which was

subject to the first power, 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, such

exercise of the first power shall, to the extent of the property

subject to the second power, be deemed a transfer of property by

the individual possessing such power.

(e) 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 rule of 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 exceeds in value

the greater of the following amounts:

(1) $5,000, or

(2) 5 percent of the aggregate value of the assets out of

which, or the proceeds of which, the exercise of the lapsed

powers could be satisfied.

(f) 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. 407; Pub. L. 94-455, title XX,

Sec. 2009(b)(4)(F), Oct. 4, 1976, 90 Stat. 1894.)

-MISC1-

AMENDMENTS

1976 - Subsec. (b). Pub. L. 94-455 struck out "A disclaimer or

renunciation of such a power of appointment shall not be deemed a

release of such power."

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2503, 2513 of this title.

-End-

-CITE-

26 USC Sec. 2515 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2515. Treatment of generation-skipping transfer tax

-STATUTE-

In the case of any taxable gift which is a direct skip (within

the meaning of chapter 13), the amount of such gift shall be

increased by the amount of any tax imposed on the transferor under

chapter 13 with respect to such gift.

-SOURCE-

(Added Pub. L. 99-514, title XIV, Sec. 1432(d)(1), Oct. 22, 1986,

100 Stat. 2730.)

-MISC1-

PRIOR PROVISIONS

A prior section, acts Aug. 16, 1954, ch. 736, 68A Stat. 409; Dec.

31, 1970, Pub. L. 91-614, title I, Sec. 102(b)(3), 84 Stat. 1841;

Oct. 4, 1976, Pub. L. 94-455, title XX, Sec. 2002(c)(2), 90 Stat.

1855; Nov. 6, 1978, Pub. L. 95-600, title VII, Sec. 702(k)(1)(B),

92 Stat. 2932, related to tenancies by the entirety in real

property, prior to repeal applicable to gifts made after Dec. 31,

1981, by Pub. L. 97-34, title IV, Sec. 403(c)(3)(B), (e)(2), Aug.

13, 1981, 95 Stat. 302, 305.

EFFECTIVE DATE

Section applicable to generation-skipping transfers (within the

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

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

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

-End-

-CITE-

26 USC [Sec. 2515A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

[Sec. 2515A. Repealed. Pub. L. 97-34, title IV, Sec. 403(c)(3)(B),

Aug. 13, 1981, 95 Stat. 302]

-MISC1-

Section, added Pub. L. 95-600, title VII, Sec. 702(k)(1)(A), Nov.

6, 1978, 92 Stat. 2932, related to tenancies by the entirety in

personal property.

EFFECTIVE DATE OF REPEAL

Repeal applicable to gifts made after Dec. 31, 1981, see section

403(e)(2) of Pub. L. 97-34, set out as an Effective Date of 1981

Amendment note under section 2056 of this title.

-End-

-CITE-

26 USC Sec. 2516 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2516. Certain property settlements

-STATUTE-

Where a husband and wife enter into a written agreement relative

to their marital and property rights and divorce occurs within the

3-year period beginning on the date 1 year before such agreement is

entered into (whether or not such agreement is approved by the

divorce decree), any transfers of property or interests in property

made pursuant to such agreement -

(1) to either spouse in settlement of his or her marital or

property rights, or

(2) to provide a reasonable allowance for the support of issue

of the marriage during minority,

shall be deemed to be transfers made for a full and adequate

consideration in money or money's worth.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 409; Pub. L. 98-369, div. A,

title IV, Sec. 425(b), July 18, 1984, 98 Stat. 804.)

-MISC1-

AMENDMENTS

1984 - Pub. L. 98-369 substituted in introductory text "within

the 3-year period beginning on the date 1 year before such

agreement is entered into" for "within 2 years thereafter".

EFFECTIVE DATE OF 1984 AMENDMENT

Section 425(c)(2) of Pub. L. 98-369 provided that: "The amendment

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

transfers 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 sections 2043, 7701 of this title.

-End-

-CITE-

26 USC [Sec. 2517 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

[Sec. 2517. Repealed. Pub. L. 99-514, title XVIII, Sec.

1852(e)(2)(A), Oct. 22, 1986, 100 Stat. 2868]

-MISC1-

Section, added and amended Pub. L. 85-866, title I, Secs. 23(f),

68(a), Sept. 2, 1958, 72 Stat. 1623, 1659; Pub. L. 87-792, Sec.

7(j), Oct. 10, 1962, 76 Stat. 830; Mar. 8, 1966, Pub. L. 89-365,

Sec. 2(b), 80 Stat. 33; Dec. 30, 1969, Pub. L. 91-172, title I,

Sec. 101(j)(24), 83 Stat. 528; Pub. L. 94-455, title XX, Sec.

2009(c) (4), (5), Oct. 4, 1976, 90 Stat. 1895, 1896; Pub. L. 97-34,

title III, Sec. 311(d)(2), Aug. 13, 1981, 95 Stat. 280; Pub. L.

98-369, div. A, title IV, Sec. 491(d)(35), July 18, 1984, 98 Stat.

851, related to the transfers of certain annuities under qualified

plans.

EFFECTIVE DATE OF REPEAL

Repeal applicable to transfers after Oct. 22, 1986, see section

1852(e)(2)(E) of Pub. L. 99-514, set out as an Effective Date of

1986 Amendment note under section 406 of this title.

-End-

-CITE-

26 USC Sec. 2518 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2518. Disclaimers

-STATUTE-

(a) General rule

For purposes of this subtitle, if a person makes a qualified

disclaimer with respect to any interest in property, this subtitle

shall apply with respect to such interest as if the interest had

never been transferred to such person.

(b) Qualified disclaimer defined

For purposes of subsection (a), the term "qualified disclaimer"

means an irrevocable and unqualified refusal by a person to accept

an interest in property but only if -

(1) such refusal is in writing,

(2) such writing is received by the transferor of the interest,

his legal representative, or the holder of the legal title to the

property to which the interest relates not later than the date

which is 9 months after the later of -

(A) the day on which the transfer creating the interest in

such person is made, or

(B) the day on which such person attains age 21,

(3) such person has not accepted the interest or any of its

benefits, and

(4) as a result of such refusal, the interest passes without

any direction on the part of the person making the disclaimer and

passes either -

(A) to the spouse of the decedent, or

(B) to a person other than the person making the disclaimer.

(c) Other rules

For purposes of subsection (a) -

(1) Disclaimer of undivided portion of interest

A disclaimer with respect to an undivided portion of an

interest which meets the requirements of the preceding sentence

shall be treated as a qualified disclaimer of such portion of the

interest.

(2) Powers

A power with respect to property shall be treated as an

interest in such property.

(3) Certain transfers treated as disclaimers

A written transfer of the transferor's entire interest in the

property -

(A) which meets requirements similar to the requirements of

paragraphs (2) and (3) of subsection (b), and

(B) which is to a person or persons who would have received

the property had the transferor made a qualified disclaimer

(within the meaning of subsection (b)),

shall be treated as a qualified disclaimer.

-SOURCE-

(Added Pub. L. 94-455, title XX, Sec. 2009(b)(1), Oct. 4, 1976, 90

Stat. 1893; amended Pub. L. 95-600, title VII, Sec. 702(m)(1), Nov.

6, 1978, 92 Stat. 2935; Pub. L. 97-34, title IV, Sec. 426(a), Aug.

13, 1981, 95 Stat. 318; Pub. L. 97-448, title I, Sec. 104(e), Jan.

12, 1983, 96 Stat. 2384.)

-MISC1-

AMENDMENTS

1983 - Subsec. (c)(3). Pub. L. 97-448 substituted "A written

transfer" for "For purposes of subsection (a), a written transfer".

1981 - Subsec. (c)(3). Pub. L. 97-34 added par. (3).

1978 - Subsec. (b)(4). Pub. L. 95-600 inserted provision relating

to spouse of decedent.

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 426(b) of Pub. L. 97-34 provided that: "The amendment

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

transfers creating an interest in the person disclaiming made after

December 31, 1981."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 702(m)(2) of Pub. L. 95-600 provided that: "The amendment

made by paragraph (1) [amending this section] shall apply to

transfers creating an interest in the person disclaiming made after

December 31, 1976."

EFFECTIVE DATE

Section 2009(e)(2) of Pub. L. 94-455 provided that: "The

amendments made by subsection (b) [enacting this section and

section 2046 of this title and amending sections 2041, 2055, 2056,

and 2514 of this title] shall apply with respect to transfers

creating an interest in the person disclaiming made after December

31, 1976."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2046, 2654 of this title.

-End-

-CITE-

26 USC Sec. 2519 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter B - Transfers

-HEAD-

Sec. 2519. Dispositions of certain life estates

-STATUTE-

(a) General rule

For purposes of this chapter and chapter 11, any disposition of

all or part of a qualifying income interest for life in any

property to which this section applies shall be treated as a

transfer of all interests in such property other than the

qualifying income interest.

(b) Property to which this subsection applies

This section applies to any property if a deduction was allowed

with respect to the transfer of such property to the donor -

(1) under section 2056 by reason of subsection (b)(7) thereof,

or

(2) under section 2523 by reason of subsection (f) thereof.

(c) Cross reference

For right of recovery for gift tax in the case of property

treated as transferred under this section, see section

2207A(b).

-SOURCE-

(Added Pub. L. 97-34, title IV, Sec. 403(d)(3)(B)(i), Aug. 13,

1981, 95 Stat. 304; amended Pub. L. 97-448, title I, Sec.

104(a)(3), (7), Jan. 12, 1983, 96 Stat. 2380, 2381.)

-MISC1-

AMENDMENTS

1983 - Pub. L. 97-448, Sec. 104(a)(3)(B), amended directory

language of Pub. L. 97-34, Sec. 403(d)(3)(B)(i), to clarify that

this section be inserted at end of subchapter B of chapter 12,

rather than at end of subchapter B of chapter 11, and did not

involve any change in text.

Subsec. (a). Pub. L. 97-448, Sec. 104(a)(3)(A), substituted "For

purposes of this chapter and chapter 11, any disposition" for "Any

disposition" and "treated as a transfer of all interests in such

property other than the qualifying income interest" for "treated as

a transfer of such property".

Subsec. (c). Pub. L. 97-448, Sec. 104(a)(7), 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 gifts made after Dec. 31, 1981, see section

403(e)(2) 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 2044, 2207A, 2523 of this

title.

-End-

-CITE-

26 USC Subchapter C - Deductions 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter C - Deductions

-HEAD-

SUBCHAPTER C - DEDUCTIONS

-MISC1-

Sec.

[2521. Repealed.]

2522. Charitable and similar gifts.

2523. Gift to spouse.

2524. Extent of deductions.

AMENDMENTS

1976 - Pub. L. 94-455, title XX, Sec. 2001(c)(2)(B)(ii), Oct. 4,

1976, 90 Stat. 1853, struck out item 2521 "Specific exemption".

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in section 2503 of this title.

-End-

-CITE-

26 USC [Sec. 2521 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter C - Deductions

-HEAD-

[Sec. 2521. Repealed. Pub. L. 94-455, title XX, Sec. 2001(b)(3),

Oct. 4, 1976, 90 Stat. 1849]

-MISC1-

Section, act Aug. 16, 1954, ch. 736, 68A Stat. 410, allowed a

deduction, in the case of a citizen or resident, an exemption of

$30,000, less amounts claimed and allowed for calendar year 1932

and calendar years intervening between that year and year for which

tax is being computed.

-End-

-CITE-

26 USC Sec. 2522 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter C - Deductions

-HEAD-

Sec. 2522. Charitable and similar gifts

-STATUTE-

(a) Citizens or residents

In computing taxable gifts for the calendar year, there shall be

allowed as a deduction in the case of a citizen or resident the

amount of all gifts made during such year to or for the use of -

(1) the United States, any State, or any political subdivision

thereof, or the District of Columbia, for exclusively public

purposes;

(2) a corporation, or trust, or community chest, fund, or

foundation, organized and operated exclusively for religious,

charitable, scientific, literary, or educational purposes, 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), 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

shareholder 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) a fraternal society, order, or association, operating under

the lodge system, but only if such gifts are to be used

exclusively for religious, charitable, scientific, literary, or

educational purposes, including the encouragement of art and the

prevention of cruelty to children or animals;

(4) posts or organizations of war veterans, or auxiliary units

or societies of any such posts or organizations, if such posts,

organizations, units, or societies are organized in the United

States or any of its possessions, and if no part of their net

earnings insures to the benefit of any private shareholder or

individual.

Rules similar to the rules of section 501(j) shall apply for

purposes of paragraph (2).

(b) Nonresidents

In the case of a nonresident not a citizen of the United States,

there shall be allowed as a deduction the amount of all gifts made

during such year to or for the use of -

(1) the United States, any State, or any political subdivision

thereof, or the District of Columbia, for exclusively public

purposes;

(2) a 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 shareholder 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) a trust, or community chest, fund, or foundation, 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

substantial part of the activities of which is carrying on

propaganda, or otherwise 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; but only if such gifts are to be used within the United

States exclusively for such purposes;

(4) a fraternal society, order, or association, operating under

the lodge system, but only if such gifts are to be used within

the United States exclusively for religious, charitable,

scientific, literary, or educational purposes, including the

encouragement of art and the prevention of cruelty to children or

animals;

(5) posts or organizations of war veterans, or auxiliary units

or societies of any such posts or organizations, if such posts,

organizations, units, or societies are organized in the United

States or any of its possessions, and if no part of their net

earnings inures to the benefit of any private shareholder or

individual.

(c) Disallowance of deductions in certain cases

(1) No deduction shall be allowed under this section for a gift

to of (!1) 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 a donor transfers an interest in property (other than

an interest described in section 170(f)(3)(B)) to a person, or for

a use, described in subsection (a) or (b) and an interest in the

same property is retained by the donor, or is transferred or has

been transferred (for less than an adequate and full consideration

in money or money's worth) from the donor to a person, or for a

use, not described in subsection (a) or (b), no deduction shall be

allowed under this section for the interest which is, or has been

transferred to the person, or for the use, described in subsection

(a) or (b), 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) Rules similar to the rules of section 2055(e)(4) shall apply

for purposes of paragraph (2).

(4) Reformations to comply with paragraph (2)

(A) In general

A deduction shall be allowed under subsection (a) in respect

of any qualified reformation (within the meaning of section

2055(e)(3)(B)).

(B) Rules similar to section 2055(e)(3) to apply

For purposes of this paragraph, rules similar to the rules of

section 2055(e)(3) shall apply.

(d) 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).

(e) Cross references

(1) For treatment of certain organizations providing child

care, see section 501(k).

(2) For exemption of certain gifts to or for the benefit of

the United States and for rules of construction with respect to

certain bequests, see section 2055(f).

(3) For treatment of gifts to or for the use of Indian tribal

governments (or their subdivisions), see section 7871.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 410; Pub. L. 85-866, title I,

Sec. 30(d), Sept. 2, 1958, 72 Stat. 1631; Pub. L. 91-172, title II,

Sec. 201(d)(3), (4)(C), (D), Dec. 30, 1969, 83 Stat. 561, 562; Pub.

L. 91-614, title I, Sec. 102(c)(2), Dec. 31, 1970, 84 Stat. 1841;

Pub. L. 94-455, title XII, Secs. 1307(d)(1)(B)(iv), (v),

1313(b)(3), title XIX, Sec. 1902(a)(11), (12)(D), title XXI, Sec.

2124(e)(3), Oct. 4, 1976, 90 Stat. 1727, 1730, 1805, 1806, 1920;

Pub. L. 97-34, title IV, Secs. 423(b), 442(c), Aug. 13, 1981, 95

Stat. 317, 322; Pub. L. 97-248, title II, Sec. 286(b)(3), Sept. 3,

1982, 96 Stat. 570; Pub. L. 97-473, title II, Sec. 202(b)(7), Jan.

14, 1983, 96 Stat. 2610; Pub. L. 98-369, div. A, title X, Secs.

1022(c), 1032(b)(3), July 18, 1984, 98 Stat. 1028, 1034; Pub. L.

99-514, title XIV, Sec. 1422(b), Oct. 22, 1986, 100 Stat. 2717;

Pub. L. 100-203, title X, Sec. 10711(a)(5), (6), Dec. 22, 1987, 101

Stat. 1330-464.)

-MISC1-

AMENDMENTS

1987 - Subsecs. (a)(2), (b)(2), (3). Pub. L. 100-203 inserted

"(or in opposition to)" after "on behalf of".

1986 - Subsecs. (d), (e). Pub. L. 99-514 added subsec. (d) and

redesignated former subsec. (d) as (e).

1984 - Subsec. (c)(4). Pub. L. 98-369, Sec. 1022(c), added par.

(4).

Subsec. (d). Pub. L. 98-369, Sec. 1032(b)(3), added par. (1) and

redesignated former pars. (1) and (2) as (2) and (3), respectively.

1983 - Subsec. (d). Pub. L. 97-473 designated existing provisions

as par. (1), substituted "bequests" for "gifts" second time

appearing in par. (1) as so designated, and added par. (2).

1982 - Subsec. (a). Pub. L. 97-248 inserted provision that rules

similar to rules of section 501(j) apply for purposes of par. (2).

1981 - Subsec. (a). Pub. L. 97-34, Sec. 442(c), substituted

"year" for "quarter" in two places in provision preceding par. (1).

Subsec. (b). Pub. L. 97-34, Sec. 442(c), substituted "year" for

"quarter" in provision preceding par. (1).

Subsec. (c)(3). Pub. L. 97-34, Sec. 423(b), added par. (3).

1976 - Subsec. (a)(1). Pub. L. 94-455, Sec. 1902(a)(12)(D),

struck out "Territory" after "any State".

Subsec. (a)(2). Pub. L. 94-455, Secs. 1307(d)(1)(B)(iv),

1313(b)(3), 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 "shareholder or individual" and

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 "or

educational purposes".

Subsec. (b)(1). Pub. L. 94-455, Sec. 1902(a)(12)(D), struck out

"Territory" after "any State".

Subsec. (b)(2). Pub. L. 94-455, Sec. 1307(d)(1)(B)(v),

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 "shareholder or individual".

Subsec. (c)(2). Pub. L. 94-455, Sec. 2124(e)(3), 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 donor's entire interest in

property)" after "an interest in property".

Subsec. (d). Pub. L. 94-455, Sec. 1902(a)(11), substituted

subsec. (d) for former subsec. (d), pars. (1) through (10), which

dealt with cross references to specific exemptions and rules of

construction for gifts to the United States and its

instrumentalities.

1970 - Pub. L. 91-614 substituted "quarter" for "year" in three

places.

1969 - Subsecs. (a)(2), (b)(2), (3). Pub. L. 91-172, Sec.

201(d)(4)(C), (D), inserted non-participation and non-intervention

in political campaigns as an additional qualification.

Subsec. (c). Pub. L. 91-172, Sec. 201(d)(3), substituted

substantive provisions for simple reference to sections 503 and 681

in which such substantive provisions were formerly set out.

1958 - Subsec. (c). Pub. L. 85-866 substituted "503" for "504".

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 1984 AMENDMENT

Amendment by section 1022(c) of Pub. L. 98-369 applicable to

reformations after Dec. 31, 1978, but inapplicable to any

reformation to which section 2055(e)(3) of this title as in effect

before July 18, 1984, applies, see section 1022(e)(1) of Pub. L.

98-369, set out as a note under section 2055 of this title.

Amendment by section 1032(b)(3) 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(4) 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)(2) of Pub. L. 97-34 provided that: "The amendment

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

transfers after December 31, 1981."

Amendment by section 442(c) of Pub. L. 97-34 applicable with

respect to gifts made after Dec. 31, 1981, see section 442(e) of

Pub. L. 97-34, set out as a note under section 2501 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by section 2124(e)(3) 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 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.

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by section 201(d)(3) of Pub. L. 91-172 applicable to

gifts made after Dec. 31, 1969, except that the amendment of par.

(2) of subsec. (c) applicable to gifts made after July 31, 1969,

see section 201(g)(4)(D) of Pub. L. 91-172, set out as a note under

section 170 of this title.

Amendment by section 201(d)(4)(C), (D) 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.

CHARITABLE LEAD TRUSTS AND CHARITABLE REMAINDER TRUSTS IN CASE OF

INCOME AND GIFT TAXES

For inclusion of provisions comparable to section 2055(e)(3) of

this title in this section, see section 514(b) of Pub. L. 95-600,

set out as a note under section 2055 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 170, 501, 508, 1015,

2012, 2503, 2632, 2642, 4947, 4948, 6019, 7871 of this title; title

12 section 3051; title 15 section 80a-3; title 16 section 1285;

title 22 section 3307.

-FOOTNOTE-

(!1) So in original. Probably should be "or".

-End-

-CITE-

26 USC Sec. 2523 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter C - Deductions

-HEAD-

Sec. 2523. Gift to spouse

-STATUTE-

(a) Allowance of deduction

Where a donor transfers during the calendar year by gift an

interest in property to a donee who at the time of the gift is the

donor's spouse, there shall be allowed as a deduction in computing

taxable gifts for the calendar year an amount with respect to such

interest equal to its value.

(b) Life estate or other terminable interest

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,

such interest transferred to the spouse will terminate or fail, no

deduction shall be allowed with respect to such interest -

(1) if the donor retains in himself, or transfers or has

transferred (for less than an adequate and full consideration in

money or money's worth) to any person other than such donee

spouse (or the estate of such spouse), an interest in such

property, and if by reason of such retention or transfer the

donor (or his heirs or assigns) or such person (or his heirs or

assigns) may possess or enjoy any part of such property after

such termination or failure of the interest transferred to the

donee spouse; or

(2) if the donor immediately after the transfer to the donee

spouse has a power to appoint an interest in such property which

he can exercise (either alone or in conjunction with any person)

in such manner that the appointee may possess or enjoy any part

of such property after such termination or failure of the

interest transferred to the donee spouse. For purposes of this

paragraph, the donor shall be considered as having immediately

after the transfer to the donee spouse such power to appoint even

though such power cannot be exercised until after the lapse of

time, upon the occurrence of an event or contingency, or on the

failure of an event or contingency to occur.

An exercise or release at any time by the donor, either alone or in

conjunction with any person, of a power to appoint an interest in

property, even though not otherwise a transfer, shall, for purposes

of paragraph (1), be considered as a transfer by him. Except as

provided in subsection (e), where at the time of the transfer it is

impossible to ascertain the particular person or persons who may

receive from the donor an interest in property so transferred by

him, such interest shall, for purposes of paragraph (1), be

considered as transferred to a person other than the donee spouse.

(c) Interest in unidentified assets

Where the assets out of which, or the proceeds of which, the

interest transferred to the donee spouse may be satisfied include a

particular asset or assets with respect to which no deduction would

be allowed if such asset or assets were transferred from the donor

to such spouse, then the value of the interest transferred to such

spouse shall, for purposes of subsection (a), be reduced by the

aggregate value of such particular assets.

(d) Joint interests

If the interest is transferred to the donee spouse as sole joint

tenant with the donor or as tenant by the entirety, the interest of

the donor in the property which exists solely by reason of the

possibility that the donor may survive the donee spouse, or that

there may occur a severance of the tenancy, shall not be considered

for purposes of subsection (b) as an interest retained by the donor

in himself.

(e) Life estate with power of appointment in donee spouse

Where the donor transfers an interest in property, if by such

transfer his spouse is entitled for life to all of 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 donee spouse to appoint the entire interest, or such

specific portion (exercisable in favor of such donee spouse, or of

the estate of such donee 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 such

interest, or such portion, to any person other than the donee

spouse -

(1) the interest, or such portion, so transferred shall, for

purposes of subsection (a) be considered as transferred to the

donee spouse, and

(2) no part of the interest, or such portion, so transferred

shall, for purposes of subsection (b)(1), be considered as

retained in the donor or transferred to any person other than the

donee spouse.

This subsection shall apply only if, by such transfer, such power

in the donee spouse to appoint the interest, or such portion,

whether exercisable by will or during life, is exercisable by such

spouse alone and in all events. For purposes of this subsection,

the term "specific portion" only includes a portion determined on a

fractional or percentage basis.

(f) Election with respect to life estate for donee spouse

(1) In general

In the case of qualified terminable interest property -

(A) for purposes of subsection (a), such property shall be

treated as transferred to the donee spouse, and

(B) for purposes of subsection (b)(1), no part of such

property shall be considered as retained in the donor or

transferred to any person other than the donee spouse.

(2) Qualified terminable interest property

For purposes of this subsection, the term "qualified terminable

interest property" means any property -

(A) which is transferred by the donor spouse,

(B) in which the donee spouse has a qualifying income

interest for life, and

(C) to which an election under this subsection applies.

(3) Certain rules made applicable

For purposes of this subsection, rules similar to the rules of

clauses (ii), (iii), and (iv) of section 2056(b)(7)(B) shall

apply and the rules of section 2056(b)(10) shall apply.

(4) Election

(A) Time and manner

An election under this subsection with respect to any

property shall be made on or before the date prescribed by

section 6075(b) for filing a gift tax return with respect to

the transfer (determined without regard to section 6019(2)) and

shall be made in such manner as the Secretary shall by

regulations prescribe.

(B) Election irrevocable

An election under this subsection, once made, shall be

irrevocable.

(5) Treatment of interest retained by donor spouse

(A) In general

In the case of any qualified terminable interest property -

(i) such property shall not be includible in the gross

estate of the donor spouse, and

(ii) any subsequent transfer by the donor spouse of an

interest in such property shall not be treated as a transfer

for purposes of this chapter.

(B) Subparagraph (A) not to apply after transfer by donee

spouse

Subparagraph (A) shall not apply with respect to any property

after the donee spouse is treated as having transferred such

property under section 2519, or such property is includible in

the donee spouse's gross estate under section 2044.

(6) Treatment of joint and survivor annuities

In the case of a joint and survivor annuity where only the

donor spouse and donee spouse have the right to receive payments

before the death of the last spouse to die -

(A) the donee spouse's interest shall be treated as a

qualifying income interest for life,

(B) the donor spouse shall be treated as having made an

election under this subsection with respect to such annuity

unless the donor spouse otherwise elects on or before the date

specified in paragraph (4)(A),

(C) paragraph (5) and section 2519 shall not apply to the

donor spouse's interest in the annuity, and

(D) if the donee spouse dies before the donor spouse, no

amount shall be includible in the gross estate of the donee

spouse under section 2044 with respect to such annuity.

An election under subparagraph (B), once made, shall be

irrevocable.

(g) Special rule for charitable remainder trusts

(1) In general

If, after the transfer, the donee spouse is the only

noncharitable beneficiary (other than the donor) of a qualified

charitable remainder trust, subsection (b) shall not apply to the

interest in such trust which is transferred to the donee spouse.

(2) Definitions

For purposes of paragraph (1), the term "noncharitable

beneficiary" and "qualified charitable remainder trust" have the

meanings given to such terms by section 2056(b)(8)(B).(!1)

(h) 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 donor.

(i) Disallowance of marital deduction where spouse not citizen

If the spouse of the donor is not a citizen of the United States

-

(1) no deduction shall be allowed under this section,

(2) section 2503(b) shall be applied with respect to gifts

which are made by the donor to such spouse and with respect to

which a deduction would be allowable under this section but for

paragraph (1) by substituting "$100,000" for "$10,000", and

(3) the principles of sections 2515 and 2515A (as such sections

were in effect before their repeal by the Economic Recovery Tax

Act of 1981) shall apply, except that the provisions of such

section 2515 providing for an election shall not apply.

This subsection shall not apply to any transfer resulting from the

acquisition of rights under a joint and survivor annuity described

in subsection (f)(6).

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 412; Pub. L. 91-614, title I,

Sec. 102(c)(3), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94-455, title

XIX, Sec. 1902(a)(12)(E), title XX, Sec. 2002(b), Oct. 4, 1976, 90

Stat. 1806, 1854; Pub. L. 97-34, title IV, Sec. 403(b)(1), (2),

(d)(2), Aug. 13, 1981, 95 Stat. 301, 303; Pub. L. 97-448, title I,

Sec. 104(a)(2)(B), (4)-(6), Jan. 12, 1983, 96 Stat. 2380, 2381;

Pub. L. 99-514, title XVIII, Sec. 1879(n)(1), Oct. 22, 1986, 100

Stat. 2910; Pub. L. 100-647, title V, Sec. 5033(b), title VI, Sec.

6152(b), Nov. 10, 1988, 102 Stat. 3672, 3725; Pub. L. 101-239,

title VII, Sec. 7815(d)(1)(A), (2), Dec. 19, 1989, 103 Stat. 2415;

Pub. L. 101-508, title XI, Sec. 11702(g)(1), Nov. 5, 1990, 104

Stat. 1388-515; Pub. L. 102-486, title XIX, Sec. 1941(b), Oct. 24,

1992, 106 Stat. 3036; Pub. L. 105-34, title XVI, Sec. 1604(g)(4),

Aug. 5, 1997, 111 Stat. 1099.)

-STATAMEND-

ADJUSTMENT OF ANNUAL EXCLUSION FOR GIFTS IN CALENDAR YEAR 2003 TO

SPOUSE WHO IS NOT UNITED STATES CITIZEN

For adjustment of dollar amounts of gifts not includible in total

amount of taxable gifts under subsection (i)(2) of this section for

calendar year 2003, see section 3.24(2) of Revenue Procedure

2002-70, set out as a note under section 1 of this title.

-REFTEXT-

REFERENCES IN TEXT

Section 2056 of this title, referred to in subsec. (g)(2), was

subsequently amended, and section 2056(b)(8)(B) no longer defines

the term "noncharitable beneficiary".

Sections 2515 and 2515A, referred to in subsec. (i)(3), were

repealed by Pub. L. 97-34, title IV, Sec. 403(c)(3)(B), Aug. 13,

1981, 95 Stat. 302.

-MISC1-

AMENDMENTS

1997 - Subsec. (g)(1). Pub. L. 105-34 substituted "qualified

charitable remainder trust" for "qualified remainder trust".

1992 - Subsec. (e). Pub. L. 102-486, Sec. 1941(b)(1), in closing

provisions, inserted at end "For purposes of this subsection, the

term 'specific portion' only includes a portion determined on a

fractional or percentage basis."

Subsec. (f)(3). Pub. L. 102-486, Sec. 1941(b)(2), inserted before

period at end "and the rules of section 2056(b)(10) shall apply".

1990 - Subsec. (i). Pub. L. 101-508 inserted at end "This

subsection shall not apply to any transfer resulting from the

acquisition of rights under a joint and survivor annuity described

in subsection (f)(6)."

1989 - Subsec. (a). Pub. L. 101-239, Sec. 7815(d)(2), struck out

"who is a citizen or resident" after "Where a donor".

Subsec. (i)(2). Pub. L. 101-239, Sec. 7815(d)(1)(A), substituted

"which are made by the donor to such spouse and with respect to

which a deduction would be allowable under this section but for

paragraph (1)" for "made by the donor to such spouse".

1988 - Subsec. (f)(6). Pub. L. 100-647, Sec. 6152(b), added par.

(6).

Subsec. (i). Pub. L. 100-647, Sec. 5033(b), added subsec. (i).

1986 - Subsec. (f)(4)(A). Pub. L. 99-514 amended subpar. (A)

generally. Prior to amendment, subpar. (A) read as follows: "An

election under this subsection with respect to any property shall

be made on or before the first April 15th after the calendar year

in which the interest was transferred and shall be made in such

manner as the Secretary shall by regulations prescribe."

1983 - Subsec. (f)(3). Pub. L. 97-448, Sec. 104(a)(6),

substituted "rules similar to the rules of clauses (ii)" for "the

rules of clauses (ii)".

Subsec. (f)(4). Pub. L. 97-448, Sec. 104(a)(4), divided existing

provisions into subpars. (A) and (B), in subpar. (A) as so

designated substituted "shall be made on or before the first April

15th after the calendar year in which the interest was transferred

and shall be made in such manner as the Secretary shall by

regulations prescribe" for "shall be made on the return of the tax

imposed by section 2501 for the calendar year in which the interest

was transferred", and in subpar. (B) as so designated substituted

"An election under this subsection" for "Such an election".

Subsec. (f)(5). Pub. L. 97-448, Sec. 104(a)(5), added par. (5).

Subsec. (h). Pub. L. 97-448, Sec. 104(a)(2)(B), added subsec.

(h).

1981 - Subsec. (a). Pub. L. 97-34, Sec. 403(b)(1), struck out

"(1) In general" designation for existing text and struck out par.

(2) which declared that the aggregate of the allowed deductions for

any calendar quarter should not exceed the sum of $100,000 reduced,

but not below zero, by the aggregate of the allowed deductions for

preceding calendar quarters beginning after Dec. 31, 1976, plus 50

percent of the lesser of the amount of the allowed deductions for

such calendar quarter, determined without regard to par. (2), or

the amount, if any, by which the aggregate determined under cl. (i)

of par. (2) for the calendar quarter and for each preceding

calendar quarter beginning after Dec. 31, 1976, exceeds $200,000.

Subsec. (f). Pub. L. 97-34, Sec. 403(b)(2), (d)(2), substituted

provision relating to election with respect to life estate for

donee spouse for provision relating to community property.

Subsec. (g). Pub. L. 97-34, Sec. 403(d)(2), added subsec. (g).

1976 - Subsec. (a). Pub. L. 94-455 designated existing provisions

as par. (1), struck out "one-half of" after "interest equal to",

and added par. (2) relating to limitations on aggregate amount of

deductions.

Subsec. (f)(1). Pub. L. 94-455, Sec. 1902(a)(12)(E), struck out

"Territory" after "any State".

1970 - Subsec. (a). Pub. L. 91-614 substituted "quarter" for

"year" in two places.

EFFECTIVE DATE OF 1992 AMENDMENT

Amendment by Pub. L. 102-486 applicable to gifts made after Oct.

24, 1992, see section 1941(c)(2) of Pub. L. 102-486, set out as a

note under section 2056 of this title.

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by 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)(1)(B) of Pub. L. 101-239 provided that: "The

amendment made by subparagraph (A) [amending this section] shall

apply with respect to gifts made after June 29, 1989."

Amendment by section 7815(d)(2) of 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)(2) of Pub. L. 100-647 provided that: "The

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

apply to gifts on or after July 14, 1988."

Amendment by section 6152(b) of Pub. L. 100-647 applicable to

transfers after Dec. 31, 1981, and, in the case of any estate or

gift tax return filed before Nov. 10, 1988, such amendment

inapplicable to the extent it would be inconsistent with the

treatment of the annuity on such return unless executor or donor

otherwise elects before the day 2 years after Nov. 10, 1988, the

time for making such an election not to expire before such date,

see section 6152(c), of Pub. L. 100-647, set out as a note under

section 2056 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Section 1879(n)(2) of Pub. L. 99-514 provided that: "The

amendment made by paragraph (1) [amending this section] shall apply

to transfers made after December 31, 1985."

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 Pub. L. 97-34 applicable to gifts made after Dec.

31, 1981, see section 403(e)(2) of Pub. L. 97-34, set out as a note

under section 2056 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Section 2002(d)(2) of Pub. L. 94-455 provided that: "The

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

apply to gifts made after December 31, 1976."

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.

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.

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.

SPECIAL RULE FOR CERTAIN TRANSFERS IN OCTOBER 1984

Section 1879(n)(3) of Pub. L. 99-514 provided that: "An election

under section 2523(f) of the Internal Revenue Code of 1954 [now

1986] with respect to an interest in property which -

"(A) was transferred during October 1984, and

"(B) was transferred pursuant to a trust instrument stating

that the grantor's intention was that the property of the trust

would constitute qualified terminable interest property as to

which a Federal gift tax marital deduction would be allowed upon

the grantor's election,

shall be made on the return of tax imposed by section 2501 of such

Code for the calendar year 1984 which is filed on or before the due

date of such return or, if a timely return is not filed, on the

first such return filed after the due date of such return and

before December 31, 1986."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1015, 2012, 2044, 2519,

2652, 2701, 6019 of this title.

-FOOTNOTE-

(!1) See References in Text note below.

-End-

-CITE-

26 USC Sec. 2524 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle B - Estate and Gift Taxes

CHAPTER 12 - GIFT TAX

Subchapter C - Deductions

-HEAD-

Sec. 2524. Extent of deductions

-STATUTE-

The deductions provided in sections 2522 and 2523 shall be

allowed only to the extent that the gifts therein specified are

included in the amount of gifts against which such deductions are

applied.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 414.)

-End-