26 U.S.C. § 2631 — GST exemption

Page 2657 TITLE 26—INTERNAL REVENUE CODE § 2631 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Section applicable to generation-skipping transfers (within the meaning of section 2611 of this title) made after Oct. 22, 1986, except as otherwise provided, see sec- tion 1433 of Pub. L. 99–514, set out as a note under sec- tion 2601 of this title. § 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.) 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. § 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 es- tate, 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 elec- tion 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. (Added Pub. L. 99–514, title XIV, § 1431(a), Oct. 22, 1986, 100 Stat. 2721.) 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. Subchapter D—GST Exemption Sec. 2631. GST exemption. 2632. Special rules for allocation of GST exemp- tion. § 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 ex- emption amount for any calendar year shall be equal to the basic exclusion amount under sec- tion 2010(c) for such calendar year. (Added Pub. L. 99–514, title XIV, § 1431(a), Oct. 22, 1986, 100 Stat. 2721; amended Pub. L. 105–34, title V, § 501(d), Aug. 5, 1997, 111 Stat. 846; Pub. L. 105–206, title VI, § 6007(a)(1), July 22, 1998, 112 Stat. 806; Pub. L. 107–16, title V, § 521(c), June 7, 2001, 115 Stat. 72; Pub. L. 111–312, title III, § 303(b)(2), Dec. 17, 2010, 124 Stat. 3303.) Editorial Notes AMENDMENTS 2010—Subsec. (c). Pub. L. 111–312 substituted ‘‘the basic exclusion amount’’ for ‘‘the applicable exclusion amount’’. 2001—Subsec. (a). Pub. L. 107–16, § 521(c)(1), sub- stituted ‘‘amount’’ for ‘‘of $1,000,000’’. Subsec. (c). Pub. L. 107–16, § 521(c)(2), amended head- ing and text of subsec. (c) generally, substituting provi- sions relating to the GST exemption amount for any calendar year for provisions which related to inflation adjustment of the $1,000,000 amount contained in sub- sec. (a) in the case of any calendar year after 1998 and applicability of any increase for any such calendar year. 1998—Subsec. (c). Pub. L. 105–206 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: ‘‘In the case of an in- dividual who dies in any calendar year after 1998, the $1,000,000 amount contained in subsection (a) shall be increased by an amount equal to— ‘‘(1) $1,000,000, multiplied by ‘‘(2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 1997’ for ‘calendar year 1992’ in sub- paragraph (B) thereof. If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be round- ed to the next lowest multiple of $10,000.’’ 1997—Subsec. (c). Pub. L. 105–34 added subsec. (c). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–312 applicable to genera- tion-skipping transfers after Dec. 31, 2010, see section 303(c)(2) of Pub. L. 111–312, set out as a note under sec- tion 2010 of this title. EFFECTIVE DATE OF 2001 AMENDMENT Amendment by Pub. L. 107–16 applicable to estates of decedents dying, and generation-skipping transfers, after Dec. 31, 2003, see section 521(e)(3) of Pub. L. 107–16, set out as a note under section 2010 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of Page 2658 TITLE 26—INTERNAL REVENUE CODE § 2632 the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title. EFFECTIVE DATE Section applicable to generation-skipping transfers (within the meaning of section 2611 of this title) made after Oct. 22, 1986, except as otherwise provided, see sec- tion 1433 of Pub. L. 99–514, set out as a note under sec- tion 2601 of this title. § 2632. Special rules for allocation of GST exemp- tion (a) Time and manner of allocation (1) Time Any allocation by an individual of his GST exemption under section 2631(a) may be made at any time on or before the date prescribed for filing the estate tax return for such indi- vidual’s estate (determined with regard to ex- tensions), regardless of whether such a return is required to be filed. (2) Manner The Secretary shall prescribe by forms or regulations the manner in which any alloca- tion referred to in paragraph (1) is to be made. (b) Deemed allocation to certain lifetime direct skips (1) In general If any individual makes a direct skip during his lifetime, any unused portion of such indi- vidual’s GST exemption shall be allocated to the property transferred to the extent nec- essary to make the inclusion ratio for such property zero. If the amount of the direct skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred. (2) Unused portion For purposes of paragraph (1), the unused portion of an individual’s GST exemption is that portion of such exemption which has not previously been allocated by such individual (or treated as allocated under paragraph (1) or subsection (c)(1)). (3) Subsection not to apply in certain cases An individual may elect to have this sub- section not apply to a transfer. (c) Deemed allocation to certain lifetime trans- fers to GST trusts (1) In general If any individual makes an indirect skip dur- ing such individual’s lifetime, any unused por- tion 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 in- direct skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred. (2) Unused portion For purposes of paragraph (1), the unused portion of an individual’s GST exemption is that portion of such exemption which has not previously been— (A) allocated by such individual, (B) treated as allocated under subsection (b) with respect to a direct skip occurring during or before the calendar year in which the indirect skip is made, or (C) treated as allocated under paragraph (1) with respect to a prior indirect skip. (3) Definitions (A) Indirect skip For purposes of this subsection, the term ‘‘indirect skip’’ means any transfer of prop- erty (other than a direct skip) subject to the tax imposed by chapter 12 made to a GST trust. (B) GST trust The term ‘‘GST trust’’ means a trust that could have a generation-skipping transfer with respect to the transferor unless— (i) the trust instrument provides that more than 25 percent of the trust corpus must be distributed to or may be with- drawn by one or more individuals who are non-skip persons— (I) before the date that the individual attains age 46, (II) on or before one or more dates specified in the trust instrument that will occur before the date that such indi- vidual attains age 46, or (III) upon the occurrence of an event that, in accordance with regulations pre- scribed by the Secretary, may reason- ably be expected to occur before the date that such individual attains age 46, (ii) the trust instrument provides that more than 25 percent of the trust corpus must be distributed to or may be with- drawn by one or more individuals who are non-skip persons and who are living on the date of death of another person identified in the instrument (by name or by class) who is more than 10 years older than such individuals, (iii) the trust instrument provides that, if one or more individuals who are non- skip persons die on or before a date or event described in clause (i) or (ii), more than 25 percent of the trust corpus either must be distributed to the estate or es- tates of one or more of such individuals or is subject to a general power of appoint- ment exercisable by one or more of such individuals, (iv) the trust is a trust any portion of which would be included in the gross es- tate of a non-skip person (other than the transferor) if such person died imme- diately after the transfer, (v) the trust is a charitable lead annuity trust (within the meaning of section 2642(e)(3)(A)) or a charitable remainder an- nuity trust or a charitable remainder unitrust (within the meaning of section 664(d)), or (vi) the trust is a trust with respect to which a deduction was allowed under sec- tion 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