26 U.S.C. § 2651 — Generation assignment

Page 2664 TITLE 26—INTERNAL REVENUE CODE § 2651 tion [amending this section] shall apply to severances after December 31, 2000.’’ Pub. L. 107–16, title V, § 563(c), June 7, 2001, 115 Stat. 91, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply to transfers subject to chapter 11 or 12 of the Internal Revenue Code of 1986 made after December 31, 2000.’’ Pub. L. 107–16, title V, § 564(b), June 7, 2001, 115 Stat. 91, provided that: ‘‘(1) RELIEF FROM LATE ELECTIONS.—Section 2642(g)(1) of the Internal Revenue Code of 1986 (as added by sub- section (a)) shall apply to requests pending on, or filed after, December 31, 2000. ‘‘(2) SUBSTANTIAL COMPLIANCE.—Section 2642(g)(2) of such Code (as so added) shall apply to transfers subject to chapter 11 or 12 of the Internal Revenue Code of 1986 made after December 31, 2000. No implication is in- tended with respect to the availability of relief from late elections or the application of a rule of substantial compliance on or before such date.’’ EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101–508, title XI, § 11703(c)(4), Nov. 5, 1990, 104 Stat. 1388–517, provided that: ‘‘The amendments made by paragraphs (1) and (2) [amending this section] shall apply to transfers after March 31, 1988.’’ 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, § 1014(g)(3)(B), Nov. 10, 1988, 102 Stat. 3563, provided that: ‘‘The amendment made by subparagraph (A) [amending this section] shall apply for purposes of determining the inclusion ratio with re- spect to property transferred after October 13, 1987.’’ Pub. L. 100–647, title I, § 1014(g)(17)(C), Nov. 10, 1988, 102 Stat. 3567, provided that: ‘‘The amendments made by this paragraph [amending this section] shall apply to transfers after March 31, 1988.’’ Amendment by section 1014(g)(4), (18) of Pub. L. 100–647 effective, except as otherwise provided, as if in- cluded 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 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. Subchapter F—Other Definitions and Special Rules Sec. 2651. Generation assignment. 2652. Other definitions. 2653. Taxation of multiple skips. 2654. Special rules. § 2651. Generation assignment (a) In general For purposes of this chapter, the generation to which any person (other than the transferor) be- longs shall be determined in accordance with the rules set forth in this section. (b) Lineal descendants (1) In general An individual who is a lineal descendant of a grandparent of the transferor shall be as- signed to that generation which results from comparing the number of generations between the grandparent and such individual with the number of generations between the grand- parent and the transferor. (2) On spouse’s side 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 be- tween such grandparent and such individual with the number of generations between such grandparent and such spouse. (3) Treatment of legal adoptions, etc. For purposes of this subsection— (A) Legal adoptions A relationship by legal adoption shall be treated as a relationship by blood. (B) Relationships by half-blood A relationship by the half-blood shall be treated as a relationship of the whole-blood. (c) Marital relationship (1) Marriage to transferor An individual who has been married at any time to the transferor shall be assigned to the transferor’s generation. (2) Marriage to other lineal descendants 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 genera- tion 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— (1) an individual born not more than 121⁄2 years after the date of the birth of the trans- feror assigned to the transferor’s generation, (2) an individual born more than 121⁄2 years but not more than 371⁄2 years after the date of the birth of the transferor assigned to the first generation younger than the transferor, and (3) similar rules for a new generation every 25 years. (e) Special rule for persons with a deceased par- ent (1) In general For purposes of determining whether any transfer is a generation-skipping transfer, if— (A) an individual is a descendant of a par- ent of the transferor (or the transferor’s spouse or former spouse), and (B) 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 indi- vidual were a member of the generation which Page 2665 TITLE 26—INTERNAL REVENUE CODE § 2652 is 1 generation below the lower of the trans- feror’s generation or the generation assign- ment of the youngest living ancestor of such individual who is also a descendant of the par- ent of the transferor (or the transferor’s spouse or former spouse), and the generation assignment of any descendant of such indi- vidual shall be adjusted accordingly. (2) Limited application of subsection to collat- eral heirs 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 (1) Individuals assigned to more than 1 genera- tion Except as provided in regulations, an indi- vidual who, but for this subsection, would be assigned to more than 1 generation shall be as- signed to the youngest such generation. (2) Interests through entities Except as provided in paragraph (3), if an es- tate, trust, partnership, corporation, or other entity has an interest in property, each indi- vidual having a beneficial interest in such en- tity shall be treated as having an interest in such property and shall be assigned to a gen- eration under the foregoing provisions of this subsection. (3) Treatment of certain charitable organiza- tions and governmental entities Any— (A) organization described in section 511(a)(2), (B) charitable trust described in section 511(b)(2), and (C) governmental entity, shall be assigned to the transferor’s genera- tion. (Added Pub. L. 99–514, title XIV, § 1431(a), Oct. 22, 1986, 100 Stat. 2725; amended Pub. L. 100–647, title I, § 1014(g)(11), (19), Nov. 10, 1988, 102 Stat. 3565, 3567; Pub. L. 105–34, title V, § 511(a), Aug. 5, 1997, 111 Stat. 860.) Editorial Notes AMENDMENTS 1997—Subsecs. (e), (f). Pub. L. 105–34 added subsec. (e) and redesignated former subsec. (e) as (f). 1988—Subsec. (b)(2). Pub. L. 100–647, § 1014(g)(19), in- serted ‘‘(or former spouse)’’ after ‘‘a spouse’’. Subsec. (e)(3). Pub. L. 100–647, § 1014(g)(11), amended par. (3) generally, including governmental entities among the organizations to be assigned to transferor’s generation. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to termi- nations, distributions, and transfers occurring after Dec. 31, 1997, see section 511(c) of Pub. L. 105–34, set out as a note under section 2612 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by 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 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. § 2652. Other definitions (a) Transferor For purposes of this chapter— (1) In general Except as provided in this subsection or sec- tion 2653(a), the term ‘‘transferor’’ means— (A) in the case of any property subject to the tax imposed by chapter 11, the decedent, and (B) 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 indi- vidual is the transferor. (2) Gift-splitting by married couples 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. (3) Special election for qualified terminable in- terest property In the case of— (A) any trust with respect to which a de- duction is allowed to the decedent under sec- tion 2056 by reason of subsection (b)(7) there- of, and (B) any trust with respect to which a de- duction to the donor spouse is allowed under section 2523 by reason of subsection (f) there- of, 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 (1) Trust The term ‘‘trust’’ includes any arrangement (other than an estate) which, although not a trust, has substantially the same effect as a trust. (2) Trustee 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. (3) Examples Arrangements to which this subsection ap- plies include arrangements involving life es- tates and remainders, estates for years, and insurance and annuity contracts.