26 U.S.C. § 2503 — Taxable gifts

Page 2635 TITLE 26—INTERNAL REVENUE CODE § 2503 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–312, title III, § 302(b)(2), Dec. 17, 2010, 124 Stat. 3301, provided that the amendment by section 302(b)(2) is effective on and after Jan. 1, 2011. EFFECTIVE DATE OF 2001 AMENDMENT Pub. L. 107–16, title V, § 511(f)(3), June 7, 2001, 115 Stat. 71, provided that: ‘‘The amendments made by sub- sections (d) and (e) [amending this section and section 2511 of this title] shall apply to gifts made after Decem- ber 31, 2009.’’ 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 Pub. L. 94–455, title XX, § 2001(d)(2), Oct. 4, 1976, 90 Stat. 1854, 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. § 2503. Taxable gifts (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 dimin- ished by the exercise of a power shall be dis- regarded 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 deter- mined under section 1(f)(3) for such calendar year by substituting ‘‘calendar year 1997’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) 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 in- terest 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 at- taining 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 de- fined in section 2514(c). [(d) Repealed. Pub. L. 97–34, title III, § 311(h)(5), Aug. 13, 1981, 95 Stat. 282] (e) Exclusion for certain transfers for edu- cational 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 organiza- tion 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 re- spect 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 prop- erty 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 de- scribed 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 organiza- tion 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 tan- gible personal property. Page 2636 TITLE 26—INTERNAL REVENUE CODE § 2503 (B) Private foundation The term ‘‘private foundation’’ has the meaning given such term by section 509, ex- cept that such term shall not include any private operating foundation (as defined in section 4942(j)(3)). (Aug. 16, 1954, ch. 736, 68A Stat. 404; Pub. L. 91–614, title I, § 102(a)(3), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 95–600, title VII, § 702(j)(2), Nov. 6, 1978, 92 Stat. 2931; Pub. L. 97–34, title III, § 311(h)(5), title IV, §§ 441(a), (b), 442(a)(3), Aug. 13, 1981, 95 Stat. 282, 319, 320; Pub. L. 99–514, title XVIII, § 1898(h)(1)(B), Oct. 22, 1986, 100 Stat. 2957; Pub. L. 100–647, title I, § 1018(s)(2)(A), (u)(52), Nov. 10, 1988, 102 Stat. 3586, 3593; Pub. L. 101–239, title VII, § 7811(m)(1), Dec. 19, 1989, 103 Stat. 2412; Pub. L. 105–34, title V, § 501(c), Aug. 5, 1997, 111 Stat. 846; Pub. L. 115–97, title I, § 11002(d)(1)(EE), Dec. 22, 2017, 131 Stat. 2060.) INFLATION ADJUSTED ITEMS FOR CERTAIN YEARS For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title. Editorial Notes AMENDMENTS 2017—Subsec. (b)(2)(B). Pub. L. 115–97 substituted ‘‘for ‘calendar year 2016’ in subparagraph (A)(ii)’’ for ‘‘for ‘calendar year 1992’ in subparagraph (B)’’. 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, § 1018(u)(52), substituted ‘‘section 213(d)’’ for ‘‘section 213(e)’’. Subsec. (f). Pub. L. 100–647, § 1018(s)(2)(A), added sub- sec. (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, § 442(a)(3)(A), sub- stituted ‘‘the total amount of gifts made during the calendar year, less the deductions provided in sub- chapter 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 fol- lowing’’ 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, § 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 dur- ing 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, § 441(a), substituted ‘‘$10,000’’ for ‘‘$3,000’’. Subsec. (d). Pub. L. 97–34, § 311(h)(5), repealed subsec. (d) which related to individual retirement accounts, etc., for spouse. Subsec. (e). Pub. L. 97–34, § 441(b), added subsec. (e). 1978—Subsec. (d). Pub. L. 95–600 added subsec. (d). 1970—Subsec. (a). Pub. L. 91–614, § 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 applica- ble deductions. Subsec. (b). Pub. L. 91–614, § 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 provi- sions requiring in the case of gifts made to any person by the donor during the calendar year 1955 and subse- quent 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. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, 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 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 Pub. L. 100–647, title I, § 1018(s)(2)(B), Nov. 10, 1988, 102 Stat. 3587, 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 sec- tion 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, ex- cept 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 appli- cable 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. Pub. L. 97–34, title IV, § 441(c), Aug. 13, 1981, 95 Stat. 319, as amended by Pub. L. 99–514, § 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— Page 2637 TITLE 26—INTERNAL REVENUE CODE § 2504 ‘‘(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 De- cember 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 appli- cable 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 Pub. L. 95–600, title VII, § 702(j)(3)(B), Nov. 6, 1978, 92 Stat. 2932, 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 [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 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. § 2504. Taxable gifts for preceding calendar peri- ods (a) In general In computing taxable gifts for preceding cal- endar periods for purposes of computing the tax for any calendar year— (1) there shall be treated as gifts such trans- fers 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 re- spect of preceding calendar periods ending be- fore 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 dur- ing 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 com- puting 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 cor- responding provisions of prior laws shall be read as ‘‘taxable gifts’’ for purposes of this chapter. (Aug. 16, 1954, ch. 736, 68A Stat. 405; Pub. L. 91–614, title I, § 102(a)(4)(A), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 94–455, title XX, § 2001(c)(2)(A), Oct. 4, 1976, 90 Stat. 1853; Pub. L. 97–34, title IV, § 442(a)(4)(A)–(D), Aug. 13, 1981, 95 Stat. 321; Pub. L. 105–34, title V, § 506(d), Aug. 5, 1997, 111 Stat. 856; Pub. L. 105–206, title VI, § 6007(e)(2)(B)[(C)], July 22, 1998, 112 Stat. 810.) Editorial Notes 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. Sec- tion 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. 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 amend- ment, 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 pre- ceding calendar period for which a tax under this chap- ter 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 provi- sions 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, § 442(a)(4)(D), substituted ‘‘cal- endar periods’’ for ‘‘years and quarters’’ in section catchline. Subsec. (a). Pub. L. 97–34, § 442(a)(4)(A), substituted in introductory text ‘‘preceding calendar periods’’ and ‘‘calendar year’’ for ‘‘preceding calendar years or cal- endar 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 cal- endar periods’’ and ‘‘calendar year’’ for ‘‘calendar years or calendar quarters’’ and ‘‘calendar quarter’’.