26 U.S.C. § 2514 — Powers of appointment

Page 2641 TITLE 26—INTERNAL REVENUE CODE § 2514 (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 sig- nified 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 sig- nified 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 cal- endar year, the liability with respect to the en- tire tax imposed by this chapter of each spouse for such year shall be joint and several. (Aug. 16, 1954, ch. 736, 68A Stat. 406; Pub. L. 91–614, title I, § 102(b)(2), Dec. 31, 1970, 84 Stat. 1840; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–34, title IV, § 442(b)(2), Aug. 13, 1981, 95 Stat. 322.) Editorial Notes AMENDMENTS 1981—Subsec. (a)(1), (2). Pub. L. 97–34, § 442(b)(2)(A), substituted ‘‘calendar year’’ for ‘‘calendar quarter’’. Subsec. (b)(2). Pub. L. 97–34, § 442(b)(2)(B)–(D), in in- troductory text, substituted ‘‘calendar year’’ for ‘‘cal- endar quarter’’, in subpar. (A), substituted ‘‘The con- sent’’ 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 con- sent’’ and ‘‘such year’’ for ‘‘the consent’’ and ‘‘such cal- endar quarter’’. Subsec. (c). Pub. L. 97–34, § 442(b)(2)(E), in provision preceding par. (1) substituted ‘‘calendar year’’ for ‘‘cal- endar quarter’’ and in par. (1) ‘‘15th day of April fol- lowing the close of such year’’ for ‘‘15th day of the sec- ond month following the close of such quarter’’. Subsec. (d). Pub. L. 97–34, § 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, § 102(b)(2)(A), substituted ‘‘calendar quarter’’ for ‘‘calendar year’’. Subsec. (b)(2)(A). Pub. L. 91–614, § 102(b)(2)(B), sub- stituted ‘‘the 15th day of the second month’’ for ‘‘the 15th day of April’’ and substituted ‘‘such calendar quar- ter’’ for ‘‘such year’’. Subsec. (b)(2)(B). Pub. L. 91–614, § 102(b)(2)(C), sub- stituted ‘‘such calendar quarter’’ for ‘‘such year’’. Subsec. (c). Pub. L. 91–614, § 102(b)(2)(A), substituted ‘‘calendar quarter’’ for ‘‘calendar year’’. Subsec. (c)(1). Pub. L. 91–614, § 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, § 102(b)(2)(A), (E), sub- stituted ‘‘calendar quarter’’ for ‘‘calendar year’’ and ‘‘such calendar quarter’’ for ‘‘such year’’. Statutory Notes and Related Subsidiaries 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. § 2514. Powers of appointment (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 exer- cise such a power or the complete release of such a power shall not be deemed an exercise thereof. If a general power of appointment cre- ated on or before October 21, 1942, has been par- tially 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 ex- ercise of a general power of appointment if— (1) such partial release occurred before No- vember 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 indi- vidual 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 appro- priate 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 be- fore 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 exer- cisable by the possessor only in conjunction with another person— (A) if the power is not exercisable by the possessor except in conjunction with the cre- ator 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 per- son having a substantial interest, in the property subject to the power, which is ad- verse to exercise of the power in favor of the possessor—such power shall not be deemed a general power of appointment. For the pur- poses of this subparagraph a person who, after the death of the possessor, may be pos- sessed of a power of appointment (with re- spect to the property subject to the posses- sor’s power) which he may exercise in his own favor shall be deemed as having an in- terest in the property and such interest shall Page 2642 TITLE 26—INTERNAL REVENUE CODE § 2515 be deemed adverse to such exercise of the possessor’s power; (C) if (after the application of subpara- graphs (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 (in- cluding 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 Octo- ber 21, 1942, is exercised by creating another power of appointment which, under the applica- ble 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 pe- riod 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 prop- erty 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 indi- vidual possessing the power shall be considered a release of such power. The rule of the pre- ceding 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 as- sets out of which, or the proceeds of which, the exercise of the lapsed powers could be satis- fied. (f) Date of creation of power For purposes of this section a power of ap- pointment created by a will executed on or be- fore October 21, 1942, shall be considered a power created on or before such date if the person exe- cuting such will dies before July 1, 1949, without having republished such will, by codicil or oth- erwise, after October 21, 1942. (Aug. 16, 1954, ch. 736, 68A Stat. 407; Pub. L. 94–455, title XX, § 2009(b)(4)(F), Oct. 4, 1976, 90 Stat. 1894.) Editorial Notes AMENDMENTS 1976—Subsec. (b). Pub. L. 94–455 struck out ‘‘A dis- claimer or renunciation of such a power of appointment shall not be deemed a release of such power.’’ Statutory Notes and Related Subsidiaries 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. § 2515. Treatment of generation-skipping transfer tax In the case of any taxable gift which is a di- rect 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. (Added Pub. L. 99–514, title XIV, § 1432(d)(1), Oct. 22, 1986, 100 Stat. 2730.) Editorial Notes PRIOR PROVISIONS A prior section, acts Aug. 16, 1954, ch. 736, 68A Stat. 409; Dec. 31, 1970, Pub. L. 91–614, title I, § 102(b)(3), 84 Stat. 1841; Oct. 4, 1976, Pub. L. 94–455, title XX, § 2002(c)(2), 90 Stat. 1855; Nov. 6, 1978, Pub. L. 95–600, title VII, § 702(k)(1)(B), 92 Stat. 2932, related to tenan- cies by the entirety in real property, prior to repeal ap- plicable to gifts made after Dec. 31, 1981, by Pub. L. 97–34, title IV, § 403(c)(3)(B), (e)(2), Aug. 13, 1981, 95 Stat. 302, 305. Statutory Notes and Related Subsidiaries 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 sec- tion 1433 of Pub. L. 99–514, set out as a note under sec- tion 2601 of this title. [§ 2515A. Repealed. Pub. L. 97–34, title IV, § 403(c)(3)(B), Aug. 13, 1981, 95 Stat. 302] Section, added Pub. L. 95–600, title VII, § 702(k)(1)(A), Nov. 6, 1978, 92 Stat. 2932, related to tenancies by the entirety in personal property. Statutory Notes and Related Subsidiaries 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. § 2516. Certain property settlements Where a husband and wife enter into a written agreement relative to their marital and prop- erty 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 prop- erty 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 minor- ity, shall be deemed to be transfers made for a full and adequate consideration in money or mon- ey’s worth. (Aug. 16, 1954, ch. 736, 68A Stat. 409; Pub. L. 98–369, div. A, title IV, § 425(b), July 18, 1984, 98 Stat. 804.)