CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS
Title 26 > CHAPTER 13
Sections (24)
§ 2601 Tax imposed
A tax is hereby imposed on every generation-skipping transfer (within the meaning of subchapter B). (Added Pub. L. 94–455, title XX, § 2006(a) , Oct. 4, 1976 , 90 Stat. 1879 ; amended Pub. L. 99–514, title XIV, § 1431(a) , Oct. 22, 1986 , 100 Stat. 2718 .)
§ 2602 Amount of tax
The amount of the tax imposed by section 2601 is— the taxable amount (determined under subchapter C), multiplied by the applicable rate (determined under subchapter E). (Added Pub. L. 94–455, title XX, § 2006(a) , Oct. 4, 1976 , 90 Stat. 1879 ; amended Pub. L. 95–600, title VII, § 702(h)(2) , (n)(4), Nov. 6, 1978 , 92 Stat. 2931 , 2936; Pub. L. 97–34, title IV, § 403(a)(2)(B) , Aug. 13, 1981 , 95 Stat. 301 ; Pub. L. 99–514, title XIV, § 1431(a) , Oct. 22, 1986 , 100 Stat. 2718 .)
§ 2603 Liability for tax
(a) Personal liability In the case of a taxable distribution, the tax imposed by section 2601 shall be paid by the transferee. In the case of a taxable termination or a direct skip from a trust, the tax shall be paid by the trustee. In the case of a direct skip (other than a direct skip from a trust), the tax shall be paid by the transferor.
(b) Source of tax Unless otherwise directed pursuant to the governing instrument by specific reference to the tax imposed by this chapter, the tax imposed by this chapter on a generation-skipping transfer shall be charged to the property constituting such transfer.
(c) Cross reference For provisions making estate and gift tax provisions with respect to transferee liability, liens, and related matters applicable to the tax imposed by section 2601, see section 2661.
[§ 2604 Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(95)(B)(i), Dec. 19, 2014, 128 Stat. 4051]
§ 2611 Generation-skipping transfer defined
(a) In general For purposes of this chapter, the term “generation-skipping transfer” means— a taxable distribution, a taxable termination, and a direct skip.
(b) Certain transfers excluded The term “generation-skipping transfer” does not include— any transfer which, if made inter vivos by an individual, would not be treated as a taxable gift by reason of section 2503(e) (relating to exclusion of certain transfers for educational or medical expenses), and any transfer to the extent— the property transferred was subject to a prior tax imposed under this chapter, the transferee in the prior transfer was assigned to the same generation as (or a lower generation than) the generation assignment of the transferee in this transfer, and such transfers do not have the effect of avoiding tax under this chapter with respect to any transfer.
§ 2612 Taxable termination; taxable distribution; direct skip
(a) Taxable termination For purposes of this chapter, the term “taxable termination” means the termination (by death, lapse of time, release of power, or otherwise) of an interest in property held in a trust unless— immediately after such termination, a non-skip person has an interest in such property, or at no time after such termination may a distribution (including distributions on termination) be made from such trust to a skip person. If, upon the termination of an interest in property held in trust by reason of the death of a lineal descendant of the transferor, a specified portion of the trust’s assets are distributed to 1 or more skip persons (or 1 or more trusts for the exclusive benefit of such persons), such termination shall constitute a taxable termination with respect to such portion of the trust property.
(b) Taxable distribution For purposes of this chapter, the term “taxable distribution” means any distribution from a trust to a skip person (other than a taxable termination or a direct skip).
(c) Direct skip For purposes of this chapter— The term “direct skip” means a transfer subject to a tax imposed by chapter 11 or 12 of an interest in property to a skip person. Solely for purposes of determining whether any transfer to a trust is a direct skip, the rules of section 2651(f)(2) shall not apply.
§ 2613 Skip person and non-skip person defined
(a) Skip person For purposes of this chapter, the term “skip person” means— a natural person assigned to a generation which is 2 or more generations below the generation assignment of the transferor, or a trust— if all interests in such trust are held by skip persons, or if— there is no person holding an interest in such trust, and at no time after such transfer may a distribution (including distributions on termination) be made from such trust to a nonskip person.
(b) Non-skip person For purposes of this chapter, the term “non-skip person” means any person who is not a skip person.
[§ 2614 Omitted]
§ 2621 Taxable amount in case of taxable distribution
(a) In general For purposes of this chapter, the taxable amount in the case of any taxable distribution shall be— the value of the property received by the transferee, reduced by any expense incurred by the transferee in connection with the determination, collection, or refund of the tax imposed by this chapter with respect to such distribution.
(b) Payment of GST tax treated as taxable distribution For purposes of this chapter, if any of the tax imposed by this chapter with respect to any taxable distribution is paid out of the trust, an amount equal to the portion so paid shall be treated as a taxable distribution.
§ 2622 Taxable amount in case of taxable termination
(a) In general For purposes of this chapter, the taxable amount in the case of a taxable termination shall be— the value of all property with respect to which the taxable termination has occurred, reduced by any deduction allowed under subsection (b).
(b) Deduction for certain expenses For purposes of subsection (a), there shall be allowed a deduction similar to the deduction allowed by section 2053 (relating to expenses, indebtedness, and taxes) for amounts attributable to the property with respect to which the taxable termination has occurred.
§ 2623 Taxable amount in case of direct skip
For purposes of this chapter, the taxable amount in the case of a direct skip shall be the value of the property received by the transferee. (Added Pub. L. 99–514, title XIV, § 1431(a) , Oct. 22, 1986 , 100 Stat. 2721 .)
§ 2624 Valuation
(a) General rule Except as otherwise provided in this chapter, property shall be valued as of the time of the generation-skipping transfer.
(b) Alternate valuation and special use valuation elections apply to certain direct skips In the case of any direct skip of property which is included in the transferor’s gross estate, the value of such property for purposes of this chapter shall be the same as its value for purposes of chapter 11 (determined with regard to sections 2032 and 2032A).
(c) Alternate valuation election permitted in the case of taxable terminations occurring at death If 1 or more taxable terminations with respect to the same trust occur at the same time as and as a result of the death of an individual, an election may be made to value all of the property included in such terminations in accordance with section 2032.
(d) Reduction for consideration provided by transferee For purposes of this chapter, the value of the property transferred shall be reduced by the amount of any consideration provided by the transferee.
§ 2631 GST exemption
(a) General rule For purposes of determining the inclusion ratio, every individual shall be allowed a GST exemption amount which may be allocated by such individual (or his executor) to any property with respect to which such individual is the transferor.
(b) Allocations irrevocable Any allocation under subsection (a), once made, shall be irrevocable.
(c) GST exemption amount For purposes of subsection (a), the GST exemption amount for any calendar year shall be equal to the basic exclusion amount under section 2010(c) for such calendar year.
§ 2632 Special rules for allocation of GST exemption
(a) Time and manner of allocation Any allocation by an individual of his GST exemption under section 2631(a) may be made at any time on or before the date prescribed for filing the estate tax return for such individual’s estate (determined with regard to extensions), regardless of whether such a return is required to be filed. The Secretary shall prescribe by forms or regulations the manner in which any allocation referred to in paragraph (1) is to be made.
(b) Deemed allocation to certain lifetime direct skips If any individual makes a direct skip during his lifetime, any unused portion of such individual’s GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero. If the amount of the direct skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred. For purposes of paragraph (1), the unused portion of an individual’s GST exemption is that portion of such exemption which has not previously been allocated by such individual (or treated as allocated under paragraph (1) or subsection (c)(1)). An individual may elect to have this subsection not apply to a transfer.
(c) Deemed allocation to certain lifetime transfers to GST trusts If any individual makes an indirect skip during such individual’s lifetime, any unused portion of such individual’s GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero. If the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred. For purposes of paragraph (1), the unused portion of an individual’s GST exemption is that portion of such exemption which has not previously been— allocated by such individual, treated as allocated under subsection (b) with respect to a direct skip occurring during or before the calendar year in which the indirect skip is made, or treated as allocated under paragraph (1) with respect to a prior indirect skip. For purposes of this subsection, the term “indirect skip” means any transfer of property (other than a direct skip) subject to the tax imposed by chapter 12 made to a GST trust. The term “GST trust” means a trust that could have a generation-skipping transfer with respect to the transferor unless— the trust instrument provides that more than 25 percent of the trust corpus must be distributed to or may be withdrawn by one or more individuals who are non-skip persons— before the date that the individual attains age 46, on or before one or more dates specified in the trust instrument that will occur before the date that such individual attains age 46, or upon the occurrence of an event that, in accordance with regulations prescribed by the Secretary, may reasonably be expected to occur before the date that such individual attains age 46, the trust instrument provides that more than 25 percent of the trust corpus must be distributed to or may be withdrawn by one or more individuals who are non-skip persons and who are living on the date of death of another person identified in the instrument (by name or by class) who is more than 10 years older than such individuals, the trust instrument provides that, if one or more individuals who are non-skip persons die on or before a date or event described in clause (i) or (ii), more than 25 percent of the trust corpus either must be distributed to the estate or estates of one or more of such individuals or is subject to a general power of appointment exercisable by one or more of such individuals, the trust is a trust any portion of which would be included in the gross estate of a non-skip person (other than the transferor) if such person died immediately after the transfer, the trust is a charitable lead annuity trust (within the meaning of section 2642(e)(3)(A)) or a charitable remainder annuity trust or a charitable remainder unitrust (within the meaning of section 664(d)), or the trust is a trust with respect to which a deduction was allowed under section 2522 for the amount of an interest in the form of the right to receive annual payments of a fixed percentage of the net fair market value of the trust property (determined yearly) and which is required to pay principal to a non-skip person if such person is alive when the yearly payments for which the deduction was allowed terminate. For purposes of this subparagraph, the value of transferred property shall not be considered to be includible in the gross estate of a non-skip person or subject to a right of withdrawal by reason of such person holding a right to withdraw so much of such property as does not exceed the amount referred to in section 2503(b) with respect to any transferor, and it shall be assumed that powers of appointment held by non-skip persons will not be exercised. For purposes of this subsection, an indirect skip to which section 2642(f) applies shall be deemed to have been made only at the close of the estate tax inclusion period. The fair market value of such transfer shall be the fair market value of the trust property at the close of the estate tax inclusion period. An individual— may elect to have this subsection not apply to— an indirect skip, or any or all transfers made by such individual to a particular trust, and may elect to treat any trust as a GST trust for purposes of this subsection with respect to any or all transfers made by such individual to such trust. An election under subparagraph (A)(i)(I) shall be deemed to be timely if filed on a timely filed gift tax return for the calendar year in which the transfer was made or deemed to have been made pursuant to paragraph (4) or on such later date or dates as may be prescribed by the Secretary. An election under clause (i)(II) or (ii) of subparagraph (A) may be made on a timely filed gift tax return for the calendar year for which the election is to become effective.
(d) Retroactive allocations If— a non-skip person has an interest or a future interest in a trust to which any transfer has been made, such person— is a lineal descendant of a grandparent of the transferor or of a grandparent of the transferor’s spouse or former spouse, and is assigned to a generation below the generation assignment of the transferor, and such person predeceases the transferor, then the transferor may make an allocation of any of such transferor’s unused GST exemption to any previous transfer or transfers to the trust on a chronological basis. If the allocation under paragraph (1) by the transferor is made on a gift tax return filed on or before the date prescribed by section 6075(b) for gifts made within the calendar year within which the non-skip person’s death occurred— the value of such transfer or transfers for purposes of section 2642(a) shall be determined as if such allocation had been made on a timely filed gift tax return for each calendar year within which each transfer was made, such allocation shall be effective immediately before such death, and the amount of the transferor’s unused GST exemption available to be allocated shall be determined immediately before such death. For purposes of this subsection, a person has a future interest in a trust if the trust may permit income or corpus to be paid to such person on a date or dates in the future.
(e) Allocation of unused GST exemption Any portion of an individual’s GST exemption which has not been allocated within the time prescribed by subsection (a) shall be deemed to be allocated as follows— first, to property which is the subject of a direct skip occurring at such individual’s death, and second, to trusts with respect to which such individual is the transferor and from which a taxable distribution or a taxable termination might occur at or after such individual’s death. The allocation under paragraph (1) shall be made among the properties described in subparagraph (A) thereof and the trusts described in subparagraph (B) thereof, as the case may be, in proportion to the respective amounts (at the time of allocation) of the nonexempt portions of such properties or trusts. For purposes of subparagraph (A), the term “nonexempt portion” means the value (at the time of allocation) of the property or trust, multiplied by the inclusion ratio with respect to such property or trust.
§ 2641 Applicable rate
(a) General rule For purposes of this chapter, the term “applicable rate” means, with respect to any generation-skipping transfer, the product of— the maximum Federal estate tax rate, and the inclusion ratio with respect to the transfer.
(b) Maximum Federal estate tax rate For purposes of subsection (a), the term “maximum Federal estate tax rate” means the maximum rate imposed by section 2001 on the estates of decedents dying at the time of the taxable distribution, taxable termination, or direct skip, as the case may be.
§ 2642 Inclusion ratio
(a) Inclusion ratio defined For purposes of this chapter— Except as otherwise provided in this section, the inclusion ratio with respect to any property transferred in a generation-skipping transfer shall be the excess (if any) of 1 over— except as provided in subparagraph (B), the applicable fraction determined for the trust from which such transfer is made, or in the case of a direct skip, the applicable fraction determined for such skip. For purposes of paragraph (1), the applicable fraction is a fraction— the numerator of which is the amount of the GST exemption allocated to the trust (or in the case of a direct skip, allocated to the property transferred in such skip), and the denominator of which is— the value of the property transferred to the trust (or involved in the direct skip), reduced by the sum of— any Federal estate tax or State death tax actually recovered from the trust attributable to such property, and any charitable deduction allowed under section 2055 or 2522 with respect to such property. If a trust is severed in a qualified severance, the trusts resulting from such severance shall be treated as separate trusts thereafter for purposes of this chapter. For purposes of subparagraph (A)— The term “qualified severance” means the division of a single trust and the creation (by any means available under the governing instrument or under local law) of two or more trusts if— the single trust was divided on a fractional basis, and the terms of the new trusts, in the aggregate, provide for the same succession of interests of beneficiaries as are provided in the original trust. If a trust has an inclusion ratio of greater than zero and less than 1, a severance is a qualified severance only if the single trust is divided into two trusts, one of which receives a fractional share of the total value of all trust assets equal to the applicable fraction of the single trust immediately before the severance. In such case, the trust receiving such fractional share shall have an inclusion ratio of zero and the other trust shall have an inclusion ratio of 1. The term “qualified severance” includes any other severance permitted under regulations prescribed by the Secretary. A severance pursuant to this paragraph may be made at any time. The Secretary shall prescribe by forms or regulations the manner in which the qualified severance shall be reported to the Secretary.
(b) Valuation rules, etc. Except as provided in subsection (f)— If the allocation of the GST exemption to any transfers of property is made on a gift tax return filed on or before the date prescribed by section 6075(b) for such transfer or is deemed to be made under section 2632(b)(1) or (c)(1)— the value of such property for purposes of subsection (a) shall be its value as finally determined for purposes of chapter 12 (within the meaning of section 2001(f)(2)), or, in the case of an allocation deemed to have been made at the close of an estate tax inclusion period, its value at the time of the close of the estate tax inclusion period, and such allocation shall be effective on and after the date of such transfer, or, in the case of an allocation deemed to have been made at the close of an estate tax inclusion period, on and after the close of such estate tax inclusion period. If property is transferred as a result of the death of the transferor, the value of such property for purposes of subsection (a) shall be its value as finally determined for purposes of chapter 11; except that, if the requirements prescribed by the Secretary respecting allocation of post-death changes in value are not met, the value of such property shall be determined as of the time of the distribution concerned. Any allocation to property transferred as a result of the death of the transferor shall be effective on and after the date of the death of the transferor. If any allocation of the GST exemption to any property not transferred as a result of the death of the transferor is not made on a gift tax return filed on or before the date prescribed by section 6075(b) and is not deemed to be made under section 2632(b)(1)— the value of such property for purposes of subsection (a) shall be determined as of the time such allocation is filed with the Secretary, and such allocation shall be effective on and after the date on which such allocation is filed with the Secretary. If the value of property is included in the estate of a spouse by virtue of section 2044, and if such spouse is treated as the transferor of such property under section 2652(a), the value of such property for purposes of subsection (a) shall be its value for purposes of chapter 11 in the estate of such spouse.
(c) Treatment of certain direct skips which are nontaxable gifts In the case of a direct skip which is a nontaxable gift, the inclusion ratio shall be zero. Paragraph (1) shall not apply to any transfer to a trust for the benefit of an individual unless— during the life of such individual, no portion of the corpus or income of the trust may be distributed to (or for the benefit of) any person other than such individual, and if the trust does not terminate before the individual dies, the assets of such trust will be includible in the gross estate of such individual. Rules similar to the rules of section 2652(c)(3) shall apply for purposes of subparagraph (A). For purposes of this subsection, the term “nontaxable gift” means any transfer of property to the extent such transfer is not treated as a taxable gift by reason of— section 2503(b) (taking into account the application of section 2513), or section 2503(e).
(d) Special rules where more than 1 transfer made to trust If a transfer of property is made to a trust in existence before such transfer, the applicable fraction for such trust shall be recomputed as of the time of such transfer in the manner provided in paragraph (2). In the case of any such transfer, the recomputed applicable fraction is a fraction— the numerator of which is the sum of— the amount of the GST exemption allocated to property involved in such transfer, plus the nontax portion of such trust immediately before such transfer, and the denominator of which is the sum of— the value of the property involved in such transfer reduced by the sum of— any Federal estate tax or State death tax actually recovered from the trust attributable to such property, and any charitable deduction allowed under section 2055 or 2522 with respect to such property, and the value of all of the property in the trust (immediately before such transfer). For purposes of paragraph (2), the term “nontax portion” means the product of— the value of all of the property in the trust, and the applicable fraction in effect for such trust. If— any allocation of the GST exemption to property transferred to a trust is not made on a timely filed gift tax return required by section 6019, and there was a previous allocation with respect to property transferred to such trust, the applicable fraction for such trust shall be recomputed as of the time of such allocation under rules similar to the rules of paragraph (2).
(e) Special rules for charitable lead annuity trusts For purposes of determining the inclusion ratio for any charitable lead annuity trust, the applicable fraction shall be a fraction— the numerator of which is the adjusted GST exemption, and the denominator of which is the value of all of the property in such trust immediately after the termination of the charitable lead annuity. For purposes of paragraph (1), the adjusted GST exemption is an amount equal to the GST exemption allocated to the trust increased by interest determined— at the interest rate used in determining the amount of the deduction under section 2055 or 2522 (as the case may be) for the charitable lead annuity, and for the actual period of the charitable lead annuity. For purposes of this subsection— The term “charitable lead annuity trust” means any trust in which there is a charitable lead annuity. The term “charitable lead annuity” means any interest in the form of a guaranteed annuity with respect to which a deduction was allowed under section 2055 or 2522 (as the case may be). Under regulations, appropriate adjustments shall be made in the application of subsection (d) to take into account the provisions of this subsection.
(f) Special rules for certain inter vivos transfers Except as provided in regulations— For purposes of determining the inclusion ratio, if— an individual makes an inter vivos transfer of property, and the value of such property would be includible in the gross estate of such individual under chapter 11 if such individual died immediately after making such transfer (other than by reason of section 2035), any allocation of GST exemption to such property shall not be made before the close of the estate tax inclusion period (and the value of such property shall be determined under paragraph (2)). If such transfer is a direct skip, such skip shall be treated as occurring as of the close of the estate tax inclusion period. In the case of any property to which paragraph (1) applies, the value of such property shall be— if such property is includible in the gross estate of the transferor (other than by reason of section 2035), its value for purposes of chapter 11, or if subparagraph (A) does not apply, its value as of the close of the estate tax inclusion period (or, if any allocation of GST exemption to such property is not made on a timely filed gift tax return for the calendar year in which such period ends, its value as of the time such allocation is filed with the Secretary). For purposes of this subsection, the term “estate tax inclusion period” means any period after the transfer described in paragraph (1) during which the value of the property involved in such transfer would be includible in the gross estate of the transferor under chapter 11 if he died. Such period shall in no event extend beyond the earlier of— the date on which there is a generation-skipping transfer with respect to such property, or the date of the death of the transferor. Except as provided in regulations, any reference in this subsection to an individual or transferor shall be treated as including a reference to the spouse of such individual or transferor. Under regulations, appropriate adjustments shall be made in the application of subsection (d) to take into account the provisions of this subsection.
(g) Relief provisions The Secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make— an allocation of GST exemption described in paragraph (1) or (2) of subsection (b), and an election under subsection (b)(3) or (c)(5) of section 2632. Such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph. In determining whether to grant relief under this paragraph, the Secretary shall take into account all relevant circumstances, including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the Secretary deems relevant. For purposes of determining whether to grant relief under this paragraph, the time for making the allocation (or election) shall be treated as if not expressly prescribed by statute. An allocation of GST exemption under section 2632 that demonstrates an intent to have the lowest possible inclusion ratio with respect to a transfer or a trust shall be deemed to be an allocation of so much of the transferor’s unused GST exemption as produces the lowest possible inclusion ratio. In determining whether there has been substantial compliance, all relevant circumstances shall be taken into account, including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the Secretary deems relevant.
§ 2651 Generation assignment
(a) In general For purposes of this chapter, the generation to which any person (other than the transferor) belongs shall be determined in accordance with the rules set forth in this section.
(b) Lineal descendants An individual who is a lineal descendant of a grandparent of the transferor shall be assigned to that generation which results from comparing the number of generations between the grandparent and such individual with the number of generations between the grandparent and the transferor. An individual who is a lineal descendant of a grandparent of a spouse (or former spouse) of the transferor (other than such spouse) shall be assigned to that generation which results from comparing the number of generations between such grandparent and such individual with the number of generations between such grandparent and such spouse. For purposes of this subsection— A relationship by legal adoption shall be treated as a relationship by blood. A relationship by the half-blood shall be treated as a relationship of the whole-blood.
(c) Marital relationship An individual who has been married at any time to the transferor shall be assigned to the transferor’s generation. An individual who has been married at any time to an individual described in subsection (b) shall be assigned to the generation of the individual so described.
(d) Persons who are not lineal descendants An individual who is not assigned to a generation by reason of the foregoing provisions of this section shall be assigned to a generation on the basis of the date of such individual’s birth with— an individual born not more than 12½ years after the date of the birth of the transferor assigned to the transferor’s generation, an individual born more than 12½ years but not more than 37½ years after the date of the birth of the transferor assigned to the first generation younger than the transferor, and similar rules for a new generation every 25 years.
(e) Special rule for persons with a deceased parent For purposes of determining whether any transfer is a generation-skipping transfer, if— an individual is a descendant of a parent of the transferor (or the transferor’s spouse or former spouse), and such individual’s parent who is a lineal descendant of the parent of the transferor (or the transferor’s spouse or former spouse) is dead at the time the transfer (from which an interest of such individual is established or derived) is subject to a tax imposed by chapter 11 or 12 upon the transferor (and if there shall be more than 1 such time, then at the earliest such time), such individual shall be treated as if such individual were a member of the generation which is 1 generation below the lower of the transferor’s generation or the generation assignment of the youngest living ancestor of such individual who is also a descendant of the parent of the transferor (or the transferor’s spouse or former spouse), and the generation assignment of any descendant of such individual shall be adjusted accordingly. This subsection shall not apply with respect to a transfer to any individual who is not a lineal descendant of the transferor (or the transferor’s spouse or former spouse) if, at the time of the transfer, such transferor has any living lineal descendant.
(f) Other special rules Except as provided in regulations, an individual who, but for this subsection, would be assigned to more than 1 generation shall be assigned to the youngest such generation. Except as provided in paragraph (3), if an estate, trust, partnership, corporation, or other entity has an interest in property, each individual having a beneficial interest in such entity shall be treated as having an interest in such property and shall be assigned to a generation under the foregoing provisions of this subsection. Any— organization described in section 511(a)(2), charitable trust described in section 511(b)(2), and governmental entity, shall be assigned to the transferor’s generation.
§ 2652 Other definitions
(a) Transferor For purposes of this chapter— Except as provided in this subsection or section 2653(a), the term “transferor” means— in the case of any property subject to the tax imposed by chapter 11, the decedent, and in the case of any property subject to the tax imposed by chapter 12, the donor. An individual shall be treated as transferring any property with respect to which such individual is the transferor. If, under section 2513, one-half of a gift is treated as made by an individual and one-half of such gift is treated as made by the spouse of such individual, such gift shall be so treated for purposes of this chapter. In the case of— any trust with respect to which a deduction is allowed to the decedent under section 2056 by reason of subsection (b)(7) thereof, and any trust with respect to which a deduction to the donor spouse is allowed under section 2523 by reason of subsection (f) thereof, the estate of the decedent or the donor spouse, as the case may be, may elect to treat all of the property in such trust for purposes of this chapter as if the election to be treated as qualified terminable interest property had not been made.
(b) Trust and trustee The term “trust” includes any arrangement (other than an estate) which, although not a trust, has substantially the same effect as a trust. In the case of an arrangement which is not a trust but which is treated as a trust under this subsection, the term “trustee” shall mean the person in actual or constructive possession of the property subject to such arrangement. Arrangements to which this subsection applies include arrangements involving life estates and remainders, estates for years, and insurance and annuity contracts.
(c) Interest A person has an interest in property held in trust if (at the time the determination is made) such person— has a right (other than a future right) to receive income or corpus from the trust, is a permissible current recipient of income or corpus from the trust and is not described in section 2055(a), or is described in section 2055(a) and the trust is— a charitable remainder annuity trust, a charitable remainder unitrust within the meaning of section 664, or a pooled income fund within the meaning of section 642(c)(5). For purposes of paragraph (1), an interest which is used primarily to postpone or avoid any tax imposed by this chapter shall be disregarded. The fact that income or corpus of the trust may be used to satisfy an obligation of support arising under State law shall be disregarded in determining whether a person has an interest in the trust, if— such use is discretionary, or such use is pursuant to the provisions of any State law substantially equivalent to the Uniform Gifts to Minors Act.
(d) Executor For purposes of this chapter, the term “executor” has the meaning given such term by section 2203.
§ 2653 Taxation of multiple skips
(a) General rule For purposes of this chapter, if— there is a generation-skipping transfer of any property, and immediately after such transfer such property is held in trust, for purposes of applying this chapter (other than section 2651) to subsequent transfers from the portion of such trust attributable to such property, the trust will be treated as if the transferor of such property were assigned to the first generation above the highest generation of any person who has an interest in such trust immediately after the transfer.
(b) Trust retains inclusion ratio Except as provided in paragraph (2), the provisions of subsection (a) shall not affect the inclusion ratio determined with respect to any trust. Under regulations prescribed by the Secretary, notwithstanding the preceding sentence, proper adjustment shall be made to the inclusion ratio with respect to such trust to take into account any tax under this chapter borne by such trust which is imposed by this chapter on the transfer described in subsection (a). If the generation-skipping transfer referred to in subsection (a) involves the transfer of property from 1 trust to another trust (hereinafter in this paragraph referred to as the “pour-over trust”), the inclusion ratio for the pour-over trust shall be determined by treating the nontax portion of such distribution as if it were a part of a GST exemption allocated to such trust. For purposes of subparagraph (A), the nontax portion of any distribution is the amount of such distribution multiplied by the applicable fraction which applies to such distribution.
§ 2654 Special rules
(a) Basis adjustment Except as provided in paragraph (2), if property is transferred in a generation-skipping transfer, the basis of such property shall be increased (but not above the fair market value of such property) by an amount equal to that portion of the tax imposed by section 2601 with respect to the transfer which is attributable to the excess of the fair market value of such property over its adjusted basis immediately before the transfer. The preceding shall be applied after any basis adjustment under section 1015 with respect to the transfer. If property is transferred in a taxable termination which occurs at the same time as and as a result of the death of an individual, the basis of such property shall be adjusted in a manner similar to the manner provided under section 1014(a); except that, if the inclusion ratio with respect to such property is less than 1, any increase or decrease in basis shall be limited by multiplying such increase or decrease (as the case may be) by the inclusion ratio.
(b) Certain trusts treated as separate trusts For purposes of this chapter— the portions of a trust attributable to transfers from different transferors shall be treated as separate trusts, and substantially separate and independent shares of different beneficiaries in a trust shall be treated as separate trusts. Except as provided in the preceding sentence, nothing in this chapter shall be construed as authorizing a single trust to be treated as 2 or more trusts. For purposes of this subsection, a trust shall be treated as part of an estate during any period that the trust is so treated under section 645.
(c) Disclaimers For provisions relating to the effect of a qualified disclaimer for purposes of this chapter, see section 2518.
(d) Limitation on personal liability of trustee A trustee shall not be personally liable for any increase in the tax imposed by section 2601 which is attributable to the fact that— section 2642(c) (relating to exemption of certain nontaxable gifts) does not apply to a transfer to the trust which was made during the life of the transferor and for which a gift tax return was not filed, or the inclusion ratio with respect to the trust is greater than the amount of such ratio as computed on the basis of the return on which was made (or was deemed made) an allocation of the GST exemption to property transferred to such trust. The preceding sentence shall not apply if the trustee has knowledge of facts sufficient reasonably to conclude that a gift tax return was required to be filed or that the inclusion ratio was erroneous.
§ 2661 Administration
Insofar as applicable and not inconsistent with the provisions of this chapter— except as provided in paragraph (2), all provisions of subtitle F (including penalties) applicable to the gift tax, to chapter 12, or to section 2501, are hereby made applicable in respect of the generation-skipping transfer tax, this chapter, or section 2601, as the case may be, and in the case of a generation-skipping transfer occurring at the same time as and as a result of the death of an individual, all provisions of subtitle F (including penalties) applicable to the estate tax, to chapter 11, or to section 2001 are hereby made applicable in respect of the generation-skipping transfer tax, this chapter, or section 2601 (as the case may be). (Added Pub. L. 99–514, title XIV, § 1431(a) , Oct. 22, 1986 , 100 Stat. 2728 .)
§ 2662 Return requirements
(a) In general The Secretary shall prescribe by regulations the person who is required to make the return with respect to the tax imposed by this chapter and the time by which any such return must be filed. To the extent practicable, such regulations shall provide that— the person who is required to make such return shall be the person liable under section 2603(a) for payment of such tax, and the return shall be filed— in the case of a direct skip (other than from a trust), on or before the date on which an estate or gift tax return is required to be filed with respect to the transfer, and in all other cases, on or before the 15th day of the 4th month after the close of the taxable year of the person required to make such return in which such transfer occurs.
(b) Information returns The Secretary may by regulations require a return to be filed containing such information as he determines to be necessary for purposes of this chapter.
§ 2663 Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this chapter, including— such regulations as may be necessary to coordinate the provisions of this chapter with the recapture tax imposed under section 2032A(c), regulations (consistent with the principles of chapters 11 and 12) providing for the application of this chapter in the case of transferors who are nonresidents not citizens of the United States, and regulations providing for such adjustments as may be necessary to the application of this chapter in the case of any arrangement which, although not a trust, is treated as a trust under section 2652(b). (Added Pub. L. 99–514, title XIV, § 1431(a) , Oct. 22, 1986 , 100 Stat. 2729 ; amended Pub. L. 100–647, title I, § 1014(g)(10) , Nov. 10, 1988 , 102 Stat. 3565 .)