26 U.S.C. § 2523 — Gift to spouse

Page 2647 TITLE 26—INTERNAL REVENUE CODE § 2523 exemption under section 501(c)(3) by reason of attempt- ing 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 provi- sion of athletic facilities or equipment)’’ after ‘‘or edu- cational purposes’’. Subsec. (b)(1). Pub. L. 94–455, § 1902(a)(12)(D), struck out ‘‘Territory’’ after ‘‘any State’’. Subsec. (b)(2). Pub. L. 94–455, § 1307(d)(1)(B)(v), sub- stituted ‘‘which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influ- ence legislation’’ for ‘‘no substantial part of the activi- ties of which is carrying on propaganda, or otherwise attempting, to influence legislation’’ after ‘‘share- holder or individual’’. Subsec. (c)(2). Pub. L. 94–455, § 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 in- terest in property’’. Subsec. (d). Pub. L. 94–455, § 1902(a)(11), substituted subsec. (d) for former subsec. (d), pars. (1) through (10), which dealt with cross references to specific exemp- tions 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, § 201(d)(4)(C), (D), inserted non-participation and non- intervention in political campaigns as an additional qualification. Subsec. (c). Pub. L. 91–172, § 201(d)(3), substituted sub- stantive provisions for simple reference to sections 503 and 681 in which such substantive provisions were for- merly set out. 1958—Subsec. (c). Pub. L. 85–866 substituted ‘‘503’’ for ‘‘504’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Amendment by section 3(d)(2) of Pub. L. 110–172 effec- tive as if included in the provisions of the Pension Pro- tection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by section 1218(c) of Pub. L. 109–280 appli- cable to contributions, bequests, and gifts made after Aug. 17, 2006, see section 1218(d) of Pub. L. 109–280, set out as a note under section 170 of this title. Amendment by section 1234(c) of Pub. L. 109–280 appli- cable to contributions made after the date which is 180 days after Aug. 17, 2006, see section 1234(d) of Pub. L. 109–280, set out as a note under section 170 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–203 applicable with re- spect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under sec- tion 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 appli- cable to reformations after Dec. 31, 1978, but inappli- cable 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 ap- plicable 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 Effec- tive 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 Pub. L. 97–34, title IV, § 423(c)(2), Aug. 13, 1981, 95 Stat. 317, provided that: ‘‘The amendment made by sub- section (b) [amending this section] shall apply to trans- fers after December 31, 1981.’’ Amendment by section 442(c) of Pub. L. 97–34 applica- ble 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 ap- plicable 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 ap- plicable 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. § 2523. Gift to spouse (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 com- puting 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— Page 2648 TITLE 26—INTERNAL REVENUE CODE § 2523 (1) if the donor retains in himself, or trans- fers or has transferred (for less than an ade- quate and full consideration in money or mon- ey’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 trans- fer to the donee spouse has a power to appoint an interest in such property which he can ex- ercise (either alone or in conjunction with any person) in such manner that the appointee may possess or enjoy any part of such prop- erty 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 ap- point even though such power cannot be exer- cised 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 sub- section (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 deduc- tion 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 par- ticular 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 sever- ance of the tenancy, shall not be considered for purposes of subsection (b) as an interest re- tained by the donor in himself. (e) Life estate with power of appointment in donee spouse Where the donor transfers an interest in prop- erty, 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 (exer- cisable in favor of such donee spouse, or of the estate of such donee spouse, or in favor of ei- ther, 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 trans- ferred 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 ap- point the interest, or such portion, whether ex- ercisable by will or during life, is exercisable by such spouse alone and in all events. For pur- poses of this subsection, the term ‘‘specific por- tion’’ 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 quali- fying income interest for life, and (C) to which an election under this sub- section applies. (3) Certain rules made applicable For purposes of this subsection, rules simi- lar 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 re- spect to any property shall be made on or be- fore the date prescribed by section 6075(b) for filing a gift tax return with respect to the transfer (determined without regard to sec- tion 6019(2)) and shall be made in such man- ner as the Secretary shall by regulations prescribe. (B) Election irrevocable An election under this subsection, once made, shall be irrevocable. Page 2649 TITLE 26—INTERNAL REVENUE CODE § 2523 (5) Treatment of interest retained by donor spouse (A) In general In the case of any qualified terminable in- terest 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 re- spect to any property after the donee spouse is treated as having transferred such prop- erty 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 sub- section with respect to such annuity unless the donor spouse otherwise elects on or be- fore 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 beneficiary who is not a charitable bene- ficiary (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 ‘‘charitable beneficiary’’ and ‘‘qualified chari- table remainder trust’’ have the meanings given to such terms by section 2056(b)(8)(B). (h) Denial of double deduction Nothing in this section or any other provision of this chapter shall allow the value of any in- terest 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 re- spect to gifts which are made by the donor to such spouse and with respect to which a deduc- tion 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 re- peal 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 sub- section (f)(6). (Aug. 16, 1954, ch. 736, 68A Stat. 412; Pub. L. 91–614, title I, § 102(c)(3), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94–455, title XIX, § 1902(a)(12)(E), title XX, § 2002(b), Oct. 4, 1976, 90 Stat. 1806, 1854; Pub. L. 97–34, title IV, § 403(b)(1), (2), (d)(2), Aug. 13, 1981, 95 Stat. 301, 303; Pub. L. 97–448, title I, § 104(a)(2)(B), (4)–(6), Jan. 12, 1983, 96 Stat. 2380, 2381; Pub. L. 99–514, title XVIII, § 1879(n)(1), Oct. 22, 1986, 100 Stat. 2910; Pub. L. 100–647, title V, § 5033(b), title VI, § 6152(b), Nov. 10, 1988, 102 Stat. 3672, 3725; Pub. L. 101–239, title VII, § 7815(d)(1)(A), (2), Dec. 19, 1989, 103 Stat. 2415; Pub. L. 101–508, title XI, § 11702(g)(1), Nov. 5, 1990, 104 Stat. 1388–515; Pub. L. 102–486, title XIX, § 1941(b), Oct. 24, 1992, 106 Stat. 3036; Pub. L. 105–34, title XVI, § 1604(g)(4), Aug. 5, 1997, 111 Stat. 1099; Pub. L. 115–141, div. U, title IV, § 401(a)(205), (206), Mar. 23, 2018, 132 Stat. 1194.) 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 REFERENCES IN TEXT Sections 2515 and 2515A, referred to in subsec. (i)(3), were repealed by Pub. L. 97–34, title IV, § 403(c)(3)(B), Aug. 13, 1981, 95 Stat. 302. AMENDMENTS 2018—Subsec. (g)(1). Pub. L. 115–141, § 401(a)(205), sub- stituted ‘‘beneficiary who is not a charitable bene- ficiary’’ for ‘‘noncharitable beneficiary’’. Subsec. (g)(2). Pub. L. 115–141, § 401(a)(206), substituted ‘‘term ‘charitable beneficiary’ ’’ for ‘‘term ‘nonchari- table beneficiary’ ’’. 1997—Subsec. (g)(1). Pub. L. 105–34 substituted ‘‘quali- fied charitable remainder trust’’ for ‘‘qualified remain- der trust’’. 1992—Subsec. (e). Pub. L. 102–486, § 1941(b)(1), in clos- ing 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, § 1941(b)(2), inserted be- fore 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 sur- vivor annuity described in subsection (f)(6).’’ 1989—Subsec. (a). Pub. L. 101–239, § 7815(d)(2), struck out ‘‘who is a citizen or resident’’ after ‘‘Where a donor’’. Subsec. (i)(2). Pub. L. 101–239, § 7815(d)(1)(A), sub- stituted ‘‘which are made by the donor to such spouse Page 2650 TITLE 26—INTERNAL REVENUE CODE § 2523 and with respect to which a deduction would be allow- able under this section but for paragraph (1)’’ for ‘‘made by the donor to such spouse’’. 1988—Subsec. (f)(6). Pub. L. 100–647, § 6152(b), added par. (6). Subsec. (i). Pub. L. 100–647, § 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 re- spect to any property shall be made on or before the first April 15th after the calendar year in which the in- terest was transferred and shall be made in such man- ner as the Secretary shall by regulations prescribe.’’ 1983—Subsec. (f)(3). Pub. L. 97–448, § 104(a)(6), sub- stituted ‘‘rules similar to the rules of clauses (ii)’’ for ‘‘the rules of clauses (ii)’’. Subsec. (f)(4). Pub. L. 97–448, § 104(a)(4), divided exist- ing provisions into subpars. (A) and (B), in subpar. (A) as so designated substituted ‘‘shall be made on or be- fore 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 pre- scribe’’ for ‘‘shall be made on the return of the tax im- posed by section 2501 for the calendar year in which the interest was transferred’’, and in subpar. (B) as so des- ignated substituted ‘‘An election under this sub- section’’ for ‘‘Such an election’’. Subsec. (f)(5). Pub. L. 97–448, § 104(a)(5), added par. (5). Subsec. (h). Pub. L. 97–448, § 104(a)(2)(B), added subsec. (h). 1981—Subsec. (a). Pub. L. 97–34, § 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, deter- mined 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 cal- endar quarter beginning after Dec. 31, 1976, exceeds $200,000. Subsec. (f). Pub. L. 97–34, § 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, § 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 limi- tations on aggregate amount of deductions. Subsec. (f)(1). Pub. L. 94–455, § 1902(a)(12)(E), struck out ‘‘Territory’’ after ‘‘any State’’. 1970—Subsec. (a). Pub. L. 91–614 substituted ‘‘quarter’’ for ‘‘year’’ in two places. Statutory Notes and Related Subsidiaries 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 Pub. L. 101–239, title VII, § 7815(d)(1)(B), Dec. 19, 1989, 103 Stat. 2415, 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 ef- fective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Rev- enue Act of 1988, Pub. L. 100–647, to which such amend- ment 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 V, § 5033(d)(2), Nov. 10, 1988, 102 Stat. 3673, 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 ap- plicable 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 annu- ity 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 Pub. L. 99–514, title XVIII, § 1879(n)(2), Oct. 22, 1986, 100 Stat. 2910, 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 oth- erwise provided, as if it had been included in the provi- sion 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 Pub. L. 94–455, title XX, § 2002(d)(2), Oct. 4, 1976, 90 Stat. 1856, 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 re- lating to estate, inheritance, or gift tax marital deduc- tions, 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 [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. Page 2651 TITLE 26—INTERNAL REVENUE CODE § 2601 1 Section numbers editorially supplied. 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 Pub. L. 99–514, title XVIII, § 1879(n)(3), Oct. 22, 1986, 100 Stat. 2910, 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 ter- minable 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.’’ § 2524. Extent of deductions 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. (Aug. 16, 1954, ch. 736, 68A Stat. 414.) CHAPTER 13—TAX ON GENERATION- SKIPPING TRANSFERS Subchapter Sec.1 A. Tax imposed .......................................... 2601 B. Generation-skipping transfers ............... 2611 C. Taxable amount ..................................... 2621 D. GST exemption ...................................... 2631 E. Applicable rate; inclusion ratio ............. 2641 F. Other definitions and special rules ........ 2651 G. Administration ...................................... 2661 Editorial Notes AMENDMENTS 1986—Pub. L. 99–514, title XIV, § 1431(a), Oct. 22, 1986, 100 Stat. 2717, struck out ‘‘CERTAIN’’ after ‘‘TAX ON’’ in chapter heading, substituted ‘‘Generation-skipping transfers’’ for ‘‘Definitions and special rules’’ in item for subchapter B and ‘‘Taxable amount’’ for ‘‘Adminis- tration’’ in item for subchapter C, and added items for subchapters D, E, and F. Subchapter A—Tax Imposed Sec. 2601. Tax imposed. 2602. Amount of tax. 2603. Liability for tax. [2604. Repealed.] Editorial Notes AMENDMENTS 2014—Pub. L. 113–295, div. A, title II, § 221(a)(95)(B)(i), Dec. 19, 2014, 128 Stat. 4051, which directed amendment of subchapter A of chapter 13 of this title by striking out item 2604 in the table of sections for ‘‘such sub- part’’, was executed by striking out item 2604 ‘‘Credit for certain State taxes’’ in the table of sections for this subchapter, to reflect the probable intent of Congress. 2004—Pub. L. 108–311, title IV, § 408(a)(21), Oct. 4, 2004, 118 Stat. 1192, added item 2604. 2001—Pub. L. 107–16, title V, § 532(c)(15), June 7, 2001, 115 Stat. 75, struck out item 2604 ‘‘Credit for certain State taxes’’. 1986—Pub. L. 99–514, title XIV, § 1431(a), Oct. 22, 1986, 100 Stat. 2717, in amending analysis of subchapter A generally, added item 2604. § 2601. Tax imposed A tax is hereby imposed on every generation- skipping transfer (within the meaning of sub- chapter 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.) Editorial Notes AMENDMENTS 1986—Pub. L. 99–514 amended section generally, sub- stituting ‘‘(within the meaning of subchapter B)’’ for ‘‘in the amount determined under section 2602’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XIV, § 1433, Oct. 22, 1986, 100 Stat. 2731, as amended by Pub. L. 100–647, title I, § 1014(h)(1)–(3)(A), (4), Nov. 10, 1988, 102 Stat. 3567, 3568, provided that: ‘‘(a) GENERAL RULE.—Except as provided in sub- section (b), the amendments made by this subtitle [sub- title D (§§ 1431–1433) of title XIV of Pub. L. 99–514, amending chapter 13 of this title, enacting section 2515 of this title, and amending sections 164, 303, 691, 2013, 2032, and 6166 of this title] shall apply to any genera- tion-skipping transfer (within the meaning of section 2611 of the Internal Revenue Code of 1986) made after the date of the enactment of this Act [Oct. 22, 1986]. ‘‘(b) SPECIAL RULES.— ‘‘(1) TREATMENT OF CERTAIN INTER VIVOS TRANSFERS MADE AFTER SEPTEMBER 25, 1985.—For purposes of sub- section (a) (and chapter 13 of the Internal Revenue Code of 1986 as amended by this part), any inter vivos transfer after September 25, 1985, and on or before the date of the enactment of this Act [Oct. 22, 1986] shall be treated as if it were made on the 1st day after the date of enactment of this Act. ‘‘(2) EXCEPTIONS.—The amendments made by this subtitle shall not apply to— ‘‘(A) any generation-skipping transfer under a trust which was irrevocable on September 25, 1985, but only to the extent that such transfer is not made out of corpus added to the trust after Sep- tember 25, 1985 (or out of income attributable to corpus so added), ‘‘(B) any generation-skipping transfer under a will or revocable trust executed before the date of the enactment of this Act [Oct. 22, 1986] if the dece- dent dies before January 1, 1987, and ‘‘(C) any generation-skipping transfer— ‘‘(i) under a trust to the extent such trust con- sists of property included in the gross estate of a decedent (other than property transferred by the decedent during his life after the date of the en- actment of this Act [Oct. 22, 1986]), or reinvest- ments thereof, or ‘‘(ii) which is a direct skip which occurs by rea- son of the death of any decedent; but only if such decedent was, on the date of the en- actment of this Act [Oct. 22, 1986], under a mental disability to change the disposition of his property and did not regain his competence to dispose of such property before the date of his death. ‘‘(3) TREATMENT OF CERTAIN TRANSFERS TO GRAND- CHILDREN.—