[USC02] 26 USC Subtitle B, CHAPTER 12, Subchapter A: Determination of Tax Liability
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*Public Laws 116-283 through 117-1 have been enacted but classifications have not yet been finalized. The currency ("laws in effect") date does not reflect acts for which classification has not been finalized.

26 USC Subtitle B, CHAPTER 12, Subchapter A: Determination of Tax Liability
From Title 26—INTERNAL REVENUE CODESubtitle B—Estate and Gift TaxesCHAPTER 12—GIFT TAX

Subchapter A—Determination of Tax Liability

Sec.
2501.
Imposition of tax.
2502.
Rate of tax.
2503.
Taxable gifts.
2504.
Taxable gifts for preceding calendar periods.
2505.
Unified credit against gift tax.

        

Amendments

1981Pub. L. 97–34, title IV, §442(a)(4)(E), Aug. 13, 1981, 95 Stat. 321, substituted "preceding calendar periods" for "preceding years and quarters" in item 2504.

1976Pub. L. 94–455, title XX, §2001(c)(2)(B)(i), Oct. 4, 1976, 90 Stat. 1853, added item 2505.

1970Pub. L. 91–614, title I, §102(a)(4)(B), Dec. 31, 1970, 84 Stat. 1840, substituted "Taxable gifts for preceding years and quarters" for "Taxable gifts for preceding years" in item 2504.

§2501. Imposition of tax

(a) Taxable transfers

(1) General rule

A tax, computed as provided in section 2502, is hereby imposed for each calendar year on the transfer of property by gift during such calendar year by any individual resident or nonresident.

(2) Transfers of intangible property

Except as provided in paragraph (3), paragraph (1) shall not apply to the transfer of intangible property by a nonresident not a citizen of the United States.

(3) Exception

(A) Certain individuals

Paragraph (2) shall not apply in the case of a donor to whom section 877(b) applies for the taxable year which includes the date of the transfer.

(B) Credit for foreign gift taxes

The tax imposed by this section solely by reason of this paragraph shall be credited with the amount of any gift tax actually paid to any foreign country in respect of any gift which is taxable under this section solely by reason of this paragraph.

(4) Transfers to political organizations

Paragraph (1) shall not apply to the transfer of money or other property to a political organization (within the meaning of section 527(e)(1)) for the use of such organization.

(5) Transfers of certain stock

(A) In general

In the case of a transfer of stock in a foreign corporation described in subparagraph (B) by a donor to whom section 877(b) applies for the taxable year which includes the date of the transfer—

(i) section 2511(a) shall be applied without regard to whether such stock is situated within the United States, and

(ii) the value of such stock for purposes of this chapter shall be its U.S.-asset value determined under subparagraph (C).

(B) Foreign corporation described

A foreign corporation is described in this subparagraph with respect to a donor if—

(i) the donor owned (within the meaning of section 958(a)) at the time of such transfer 10 percent or more of the total combined voting power of all classes of stock entitled to vote of the foreign corporation, and

(ii) such donor owned (within the meaning of section 958(a)), or is considered to have owned (by applying the ownership rules of section 958(b)), at the time of such transfer, more than 50 percent of—

(I) the total combined voting power of all classes of stock entitled to vote of such corporation, or

(II) the total value of the stock of such corporation.

(C) U.S.-asset value

For purposes of subparagraph (A), the U.S.-asset value of stock shall be the amount which bears the same ratio to the fair market value of such stock at the time of transfer as—

(i) the fair market value (at such time) of the assets owned by such foreign corporation and situated in the United States, bears to

(ii) the total fair market value (at such time) of all assets owned by such foreign corporation.

(6) Transfers to certain exempt organizations

Paragraph (1) shall not apply to the transfer of money or other property to an organization described in paragraph (4), (5), or (6) of section 501(c) and exempt from tax under section 501(a), for the use of such organization.

(b) Certain residents of possessions considered citizens of the United States

A donor who is a citizen of the United States and a resident of a possession thereof shall, for purposes of the tax imposed by this chapter, be considered a "citizen" of the United States within the meaning of that term wherever used in this title unless he acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States.

(c) Certain residents of possessions considered nonresidents not citizens of the United States

A donor who is a citizen of the United States and a resident of a possession thereof shall, for purposes of the tax imposed by this chapter, be considered a "nonresident not a citizen of the United States" within the meaning of that term wherever used in this title, but only if such donor acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States.

(d) Cross references

(1) For increase in basis of property acquired by gift for gift tax paid, see section 1015(d).

(2) For exclusion of transfers of property outside the United States by a nonresident who is not a citizen of the United States, see section 2511(a).

(Aug. 16, 1954, ch. 736, 68A Stat. 403; Pub. L. 85–866, title I, §§43(b), 102(b), Sept. 2, 1958, 72 Stat. 1641, 1674; Pub. L. 86–779, §4(d), Sept. 14, 1960, 74 Stat. 1000; Pub. L. 89–809, title I, §109(a), Nov. 13, 1966, 80 Stat. 1574; Pub. L. 91–614, title I, §102(a)(1), Dec. 31, 1970, 84 Stat. 1838; Pub. L. 93–625, §14(a), Jan. 3, 1975, 88 Stat. 2121; Pub. L. 94–455, title XIX, §§1902(a)(10), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1805, 1834; Pub. L. 97–34, title IV, §442(a)(1), Aug. 13, 1981, 95 Stat. 320; Pub. L. 100–647, title III, §3031(a)(2), Nov. 10, 1988, 102 Stat. 3635; Pub. L. 101–508, title XI, §11601(b)(2), Nov. 5, 1990, 104 Stat. 1388–490; Pub. L. 104–191, title V, §511(e)(2), (f)(2)(B), Aug. 21, 1996, 110 Stat. 2098, 2100; Pub. L. 105–34, title XVI, §1602(g)(5), Aug. 5, 1997, 111 Stat. 1095; Pub. L. 108–357, title VIII, §804(d), Oct. 22, 2004, 118 Stat. 1571; Pub. L. 114–113, div. Q, title IV, §408(a), Dec. 18, 2015, 129 Stat. 3120.)

Amendments

2015—Subsec. (a)(6). Pub. L. 114–113 added par. (6).

2004—Subsec. (a)(3) to (5). Pub. L. 108–357 added pars. (3) and (5), redesignated former par. (5) as (4), and struck out former pars. (3) and (4) which related to exception of certain individuals from taxable transfers and burden of proof.

1997—Subsec. (a)(3)(C). Pub. L. 105–34 substituted "donor" for "decedent".

1996—Subsec. (a)(3). Pub. L. 104–191, §511(e)(2), substituted "Exception" for "Exceptions" in heading and amended text generally. Prior to amendment, text read as follows: "Paragraph (2) shall not apply in the case of a donor who at any time after March 8, 1965, and within the 10-year period ending with the date of transfer lost United States citizenship unless—

"(A) such donor's loss of United States citizenship resulted from the application of section 301(b), 350, or 355 of the Immigration and Nationality Act, as amended (8 U.S.C. 1401(b), 1482, or 1487), or

"(B) such loss did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A."

Subsec. (a)(3)(E). Pub. L. 104–191, §511(f)(2)(B), added subpar. (E).

1990—Subsec. (d)(3). Pub. L. 101–508 struck out par. (3) which read as follows: "For treatment of certain transfers related to estate tax valuation freezes as gifts to which this chapter applies, see section 2036(c)(4)."

1988—Subsec. (d)(3). Pub. L. 100–647 added par. (3).

1981—Subsec. (a)(1), (4). Pub. L. 97–34 substituted "calendar year" for "calendar quarter" wherever appearing.

1976—Subsec. (a)(1). Pub. L. 94–455 inserted "for each calendar quarter" after "hereby imposed" and struck out "For the first calendar quarter of calendar year 1971 and each calendar quarter thereafter" after "General rule-".

Subsec. (a)(4). Pub. L. 94–455, §1906(b)(13)(A), struck out "or his delegate" after "Secretary".

1975—Subsec. (a)(5). Pub. L. 93–625 added par. (5).

1970—Subsec. (a)(1). Pub. L. 91–614, §102(a)(1)(A), substituted "For the first calendar quarter of the calendar year 1971 and each calendar quarter thereafter" for "For the calendar year 1955 and each calendar year thereafter" and "during such calendar quarter" for "during such calendar year".

Subsec. (a)(4). Pub. L. 91–614, §102(a)(1)(B), substituted "calendar quarter" for "calendar year".

1966—Subsec. (a). Pub. L. 89–809 redesignated existing provisions as par. (1), struck out ", except transfers of intangible property by a nonresident not a citizen of the United States and who was not engaged in business in the United States during such calendar year" after "resident or nonresident", and added pars. (2) to (4).

1960—Subsec. (a). Pub. L. 86–779, §4(d)(2), struck out "who is" before "not a citizen".

Subsecs. (c), (d). Pub. L. 86–779, §4(d)(1), added subsec. (c) and redesignated former subsec. (c) as (d).

1958—Subsec. (b). Pub. L. 85–866, §102(b), added subsec. (b) and redesignated former subsec. (b) as (c).

Subsec. (c). Pub. L. 85–866, §102(b), redesignated former subsec. (b) as (c) and Pub. L. 85–866, §43(b), made the heading read in the plural, designated existing provisions as par. (2) and added par. (1).

Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title IV, §408(b), Dec. 18, 2015, 129 Stat. 3121, provided that: "The amendment made by subsection (a) [amending this section] shall apply to gifts made after the date of the enactment of this Act [Dec. 18, 2015]."

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to individuals who expatriate after June 3, 2004, see section 804(f) of Pub. L. 108–357, set out as a note under section 877 of this title.

Effective Date of 1997 Amendment

Amendment by Pub. L. 105–34 effective as if included in the provisions of the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104–191, to which such amendment relates, see section 1602(i) of Pub. L. 105–34, set out as a note under section 26 of this title.

Effective Date of 1996 Amendment

Amendment by Pub. L. 104–191 applicable to individuals losing United States citizenship on or after Feb. 6, 1995, and to long-term residents of the United States with respect to whom an event described in section 877(e)(1)(A) or (B) of this title occurs on or after Feb. 6, 1995, with special rule for certain individuals who performed an act of expatriation specified in section 1481(a)(1)–(4) of Title 8, Aliens and Nationality, before Feb. 6, 1995, see section 511(g) of Pub. L. 104–191, set out as a note under section 877 of this title.

Effective Date of 1990 Amendment

Amendment by Pub. L. 101–508 applicable in the case of property transferred after Dec. 17, 1987, see section 11601(c) of Pub. L. 101–508, set out as a note under section 2036 of this title.

Effective Date of 1988 Amendment

Amendment by Pub. L. 100–647 applicable in cases where transfer referred to in section 2036(c)(1)(B) of this title is on or after June 21, 1988, see section 3031(h)(2) of Pub. L. 100–647, set out as a note under section 2036 of this title.

Effective Date of 1981 Amendment

Pub. L. 97–34, title IV, §442(e), Aug. 13, 1981, 95 Stat. 323, provided that: "The amendments made by this section [amending this section and sections 1015, 2502, 2503, 2504, 2505, 2512, 2513, 2522, 6019, 6075, and 6212 of this title] shall apply with respect to gifts made after December 31, 1981."

Effective Date of 1976 Amendment

Pub. L. 94–455, title XIX, §1902(c)(2), Oct. 4, 1976, 90 Stat. 1806, as amended by Pub. L. 95–600, title VII, §703(j)(12), Nov. 6, 1978, 92 Stat. 2942, provided that: "The amendments made by paragraphs (10), (11), and (12)(D) and (E) of subsection (a) [amending this section and sections 2522 and 2523 of this title] shall apply with respect to gifts made after December 31, 1976."

Effective Date of 1975 Amendment

Pub. L. 93–625, §14(b), Jan. 3, 1975, 88 Stat. 2121, provided that: "The amendment made by subsection (a) [amending this section] shall apply to transfers made after May 7, 1974."

Effective Date of 1970 Amendment

Pub. L. 91–614, title I, §102(e), Dec. 31, 1970, 84 Stat. 1842, provided that: "The amendments made by this section [amending this section and sections 1015, 2012, 2502, 2503, 2504, 2512, 2513, 2515, 2521, 2522, 2523, 6019, 6075, 6212, 6214, 6324, 6501, and 6512 of this title and enacting provisions set out as a note under this section] shall apply with respect to gifts made after December 31, 1970."

Effective Date of 1966 Amendment

Pub. L. 89–809, title I, §109(c), Nov. 13, 1966, 80 Stat. 1575, provided that: "The amendments made by this section [amending this section and section 2511 of this title] shall apply with respect to the calendar year 1967 and all calendar years thereafter."

Effective Date of 1960 Amendment

Pub. L. 86–779, §4(e)(3), Sept. 14, 1960, 74 Stat. 1000, provided that: "The amendments made by subsection (d) [amending this section] shall apply with respect to gifts made after the date of the enactment of this Act [Sept. 14, 1960]."

Effective Date of 1958 Amendment

Amendment by Pub. L. 85–866 applicable to gifts made after September 2, 1958, see section 102(d) of Pub. L. 85–866, set out as a note under section 2014 of this title.

Construction of 2015 Amendment

Pub. L. 114–113, div. Q, title IV, §408(c), Dec. 18, 2015, 129 Stat. 3121, provided that: "Nothing in the amendment made by subsection (a) [amending this section] shall be construed to create any inference with respect to whether any transfer of property (whether made before, on, or after the date of the enactment of this Act [Dec. 18, 2015]) to an organization described in paragraph (4), (5), or (6) of section 501(c) of the Internal Revenue Code of 1986 is a transfer of property by gift for purposes of chapter 12 of such Code."

Election To Have Amendments by Title IV of the Economic Recovery Tax Act of 1981 Not Apply

Pub. L. 97–448, title I, §104(d)(3), Jan. 12, 1983, 96 Stat. 2383, as amended by Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(A) In the case of any decedent—

"(i) who dies before August 13, 1984, and

"(ii) who made a gift (before August 13, 1981, and during the 3-year period ending on the date of the decedent's death) on which tax imposed by chapter 12 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] has been paid before April 16, 1982,

such decedent's executor may make an election to have subtitle B of such Code (relating to estate and gift taxes) applied with respect to such decedent without regard to any of the amendments made by title IV of the Economic Recovery Tax Act of 1981 [Pub. L. 97–34, title IV].

"(B) An election under subparagraph (A) shall be made at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe.

"(C) An election under subparagraph (A), once made, shall be irrevocable."

§2502. Rate of tax

(a) Computation of tax

The tax imposed by section 2501 for each calendar year shall be an amount equal to the excess of—

(1) a tentative tax, computed under section 2001(c), on the aggregate sum of the taxable gifts for such calendar year and for each of the preceding calendar periods, over

(2) a tentative tax, computed under such section, on the aggregate sum of the taxable gifts for each of the preceding calendar periods.

(b) Preceding calendar period

Whenever used in this title in connection with the gift tax imposed by this chapter, the term "preceding calendar period" means—

(1) calendar years 1932 and 1970 and all calendar years intervening between calendar year 1932 and calendar year 1970,

(2) the first calendar quarter of calendar year 1971 and all calendar quarters intervening between such calendar quarter and the first calendar quarter of calendar year 1982, and

(3) all calendar years after 1981 and before the calendar year for which the tax is being computed.


For purposes of paragraph (1), the term "calendar year 1932" includes only that portion of such year after June 6, 1932.

(c) Tax to be paid by donor

The tax imposed by section 2501 shall be paid by the donor.

(Aug. 16, 1954, ch. 736, 68A Stat. 403; Pub. L. 91–614, title I, §102(a)(2), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 94–455, title XX, §2001(b)(1), Oct. 4, 1976, 90 Stat. 1849; Pub. L. 97–34, title IV, §442(a)(2), Aug. 13, 1981, 95 Stat. 320; Pub. L. 100–203, title X, §10401(b)(2)(B), Dec. 22, 1987, 101 Stat. 1330–431; Pub. L. 107–16, title V, §511(d), June 7, 2001, 115 Stat. 70; Pub. L. 111–312, title III, §302(b)(2), Dec. 17, 2010, 124 Stat. 3301.)

Amendments

2010—Subsec. (a). Pub. L. 111–312 amended subsec. (a) to read as if amendment by Pub. L. 107–16, §511(d), had never been enacted. See 2001 Amendment note below.

2001—Subsec. (a). Pub. L. 107–16, §511(d), amended subsec. (a) generally. Prior to amendment, text read as follows: "The tax imposed by section 2501 for each calendar year shall be an amount equal to the excess of—

"(1) a tentative tax, computed under section 2001(c), on the aggregate sum of the taxable gifts for such calendar year and for each of the preceding calendar periods, over

"(2) a tentative tax, computed under such section, on the aggregate sum of the taxable gifts for each of the preceding calendar periods."

1987—Subsec. (a)(1). Pub. L. 100–203, §10401(b)(2)(B)(i), substituted "under section 2001(c)" for "in accordance with the rate schedule set forth in section 2001(c)".

Subsec. (a)(2). Pub. L. 100–203, §10401(b)(2)(B)(ii), substituted "under such section" for "in accordance with such rate schedule".

1981—Subsec. (a). Pub. L. 97–34 substituted in introductory text and par. (1) "calendar year" for "calendar quarter" and in pars. (1) and (2) "calendar periods" for "calendar years and calendar quarters".

Subsec. (b). Pub. L. 97–34 substituted definition of "preceding calendar period" for "calendar quarter", the latter including only the first calendar quarter of the calendar year 1971 and succeeding calendar quarters (covered in par. (2)), the former incorporating former subsec. (c)(1) definition of "preceding calendar years" as meaning calendar years 1932 and 1970 and all calendar years intervening between calendar year 1932 and calendar year 1970 and "calendar year 1932" as including only the portion of such year after June 6, 1932, and former subsec. (c)(2) definition of "preceding calendar quarters" as meaning the first calendar quarter of calendar year 1971 and all calendar quarters intervening between such calendar quarter and the calendar quarter for which the tax is being computed.

Subsecs. (c), (d). Pub. L. 97–34 redesignated subsec. (d) as (c). Former subsec. (c), defining "preceding calendar years" and "preceding calendar quarters", was incorporated in subsec. (b).

1976—Subsec. (a). Pub. L. 94–455 inserted "tentative" after "(1) a" and "(2) a" and substituted in par. (1) "section 2001(c)" for "this subsection" after "set forth in".

1970—Subsec. (a). Pub. L. 91–614, §102(a)(2)(A), substituted a computation of tax formula based on the current calendar quarter, preceding calendar quarters, and preceding calendar years for a formula based entirely on the current and preceding calendar years.

Subsec. (b). Pub. L. 91–614, §102(a)(2)(B), substituted definition of "calendar quarter" for definition of "calendar year".

Subsec. (c). Pub. L. 91–614, §102(a)(2)(B), substituted definition of "preceding calendar years and quarters" for definition of "preceding calendar years".

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 subsections (d) and (e) [amending this section and section 2511 of this title] shall apply to gifts made after December 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 diminished by the exercise of a power shall be disregarded 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 determined 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 interest 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 attaining 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 defined 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 educational 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 organization 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 respect 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 property 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 described 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 organization 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 tangible personal property.

(B) Private foundation

The term "private foundation" has the meaning given such term by section 509, except 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.

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 subsec. (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), substituted "the total amount of gifts made during the calendar year, less the deductions provided in subchapter 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 following" 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 during 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 applicable 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 provisions requiring in the case of gifts made to any person by the donor during the calendar year 1955 and subsequent 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.

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 section 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, except 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 applicable 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—

"(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 December 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 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 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 periods

(a) In general

In computing taxable gifts for preceding calendar periods for purposes of computing the tax for any calendar year—

(1) there shall be treated as gifts such transfers 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 respect of preceding calendar periods ending before 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 during 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 computing 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 corresponding 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.)

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, as amended. Section 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 amendment, 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 preceding calendar period for which a tax under this chapter 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 provisions of prior laws has been assessed or paid for such preceding calendar period" after "as defined in section 2502(b)".

1981Pub. L. 97–34, §442(a)(4)(D), substituted "calendar 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 calendar 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 calendar periods" and "calendar year" for "calendar years or calendar quarters" and "calendar quarter".

Subsec. (b). Pub. L. 97–34, §442(a)(4)(B), substituted in heading "calendar periods" for "years and quarters" and in text "preceding calendar periods" for "preceding calendar years and calendar quarters", "the periods" for "the years and calendar quarters", and "such preceding calendar periods" for "such years and calendar quarters".

Subsec. (c). Pub. L. 97–34, §442(a)(4)(C), substituted in heading "calendar periods" for "calendar years and quarters" and in text "preceding calendar period" for "preceding calendar year or calendar quarter" in four places, "any calendar year" for "any calendar quarter", and "section 2502(b)" for "section 2502(c)".

1976—Subsec. (a). Pub. L. 94–455 inserted "(as in effect before its repeal by the Tax Reform Act of 1976)" after "section 2521" and "ending before January 1, 1977" after "years or calendar quarters" and substituted "of" for "to previous" after "computations in respect".

1970Pub. L. 91–614 substituted "Taxable gifts for preceding years and quarters" for "Taxable gifts for preceding years" in section catchline.

Subsec. (a). Pub. L. 91–614 substituted "In computing taxable gifts for the preceding calendar years or calendar quarters for the purpose of computing the tax for any calendar quarter," for "In computing taxable gifts for the calendar year 1954 and preceding calendar years for the purpose of computing the tax for the calendar year 1955 or any calendar year thereafter," provided that the laws applicable in the calendar quarters as well as the years in which the transfers in question were made shall apply, and substituted "previous calendar years or calendar quarters for the purpose of computing the tax for any calendar year or calendar quarter" for "the calendar year 1954 and previous calendar years for the purpose of computing the tax for the calendar year 1955 or any calendar year thereafter".

Subsec. (b). Pub. L. 91–614 inserted reference to calendar quarters in heading, substituted "during preceding calendar years and calendar quarters," for "during the calendar year 1954 and preceding calendar years," made reference to the amount excluded by gift tax laws applicable to the calendar quarters as well as years in which the gifts were made, and substituted "during such years and calendar quarters" for "during such year".

Subsec. (c). Pub. L. 91–614 inserted reference to calendar quarters in heading, inserted "or calendar quarter" after "calendar year" in four places, and substituted "for any calendar quarter," for "for the calendar year 1955 and subsequent calendar years,".

Subsec. (d). Pub. L. 91–614 struck out "For years before the calendar year 1955" from explanation of term "net gifts" as used in corresponding provisions of prior laws.

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of 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 of 1997 Amendment

Amendment by Pub. L. 105–34 applicable to gifts made after Aug. 5, 1997, see section 506(e)(1) of Pub. L. 105–34, as amended, 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 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.

§2505. Unified credit against gift tax

(a) General rule

In the case of a citizen or resident of the United States, there shall be allowed as a credit against the tax imposed by section 2501 for each calendar year an amount equal to—

(1) the applicable credit amount in effect under section 2010(c) which would apply if the donor died as of the end of the calendar year, reduced by

(2) the sum of the amounts allowable as a credit to the individual under this section for all preceding calendar periods.


For purposes of applying paragraph (2) for any calendar year, the rates of tax in effect under section 2502(a)(2) for such calendar year shall, in lieu of the rates of tax in effect for preceding calendar periods, be used in determining the amounts allowable as a credit under this section for all preceding calendar periods.

(b) Adjustment to credit for certain gifts made before 1977

The amount allowable under subsection (a) shall be reduced by an amount equal to 20 percent of the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the individual after September 8, 1976.

(c) Limitation based on amount of tax

The amount of the credit allowed under subsection (a) for any calendar year shall not exceed the amount of the tax imposed by section 2501 for such calendar year.

(Added Pub. L. 94–455, title XX, §2001(b)(2), Oct. 4, 1976, 90 Stat. 1849; amended Pub. L. 97–34, title IV, §§401(b), 442(a)(5), Aug. 13, 1981, 95 Stat. 299, 321; Pub. L. 101–508, title XI, §11801(a)(40), (c)(19)(B), Nov. 5, 1990, 104 Stat. 1388–521, 1388-528; Pub. L. 105–34, title V, §501(a)(2), Aug. 5, 1997, 111 Stat. 845; Pub. L. 107–16, title V, §521(b), June 7, 2001, 115 Stat. 71; Pub. L. 111–312, title III, §§301(b), 302(b)(1)(A), (d)(2), 303(b)(1), Dec. 17, 2010, 124 Stat. 3300–3303.)

References in Text

The Tax Reform Act of 1976, referred to in subsec. (b), is Pub. L. 94–455, Oct. 4, 1976, 90 Stat. 1520, as amended. Section 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

2010—Subsec. (a). Pub. L. 111–312, §302(d)(2), inserted concluding provisions.

Subsec. (a)(1). Pub. L. 111–312, §303(b)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "the applicable credit amount in effect under section 2010(c) for such calendar year, reduced by".

Pub. L. 111–312, §302(b)(1)(A), struck out "(determined as if the applicable exclusion amount were $1,000,000)" after "calendar year".

Pub. L. 111–312, §301(b), amended subsec. (a)(1) to read as if amendment by Pub. L. 107–16, §521(b)(2), had never been enacted. See 2001 Amendment note below.

2001—Subsec. (a)(1). Pub. L. 107–16, §521(b)(2), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "the applicable credit amount in effect under section 2010(c) for such calendar year (determined as if the applicable exclusion amount were $1,000,000), reduced by".

Pub. L. 107–16, §521(b)(1), inserted "(determined as if the applicable exclusion amount were $1,000,000)" after "calendar year".

1997—Subsec. (a)(1). Pub. L. 105–34 substituted "the applicable credit amount in effect under section 2010(c) for such calendar year" for "$192,800".

1990—Subsecs. (b) to (d). Pub. L. 101–508 redesignated subsecs. (c) and (d) as subsecs. (b) and (c), respectively, and struck out former subsec. (b) which provided for a phase-in of the unified credit against gift tax.

1981—Subsec. (a). Pub. L. 97–34, §442(a)(5)(A), substituted in provision preceding par. (1) "year" for "quarter", and "periods" for "quarters" in par. (2).

Subsec. (a)(1). Pub. L. 97–34, §401(b)(1), substituted "$192,800" for "$47,000".

Subsec. (b). Pub. L. 97–34, §401(b)(2), struck out from heading "$47,000" before "credit", substituted subsec. (a)(1) substitutions for "$192,800" of amounts of "$62,800", "$79,300", "$96,300", "$121,800", and "$155,800" in the case of gifts made in 1982, 1983, 1984, 1985, and 1986, respectively, for subsec. (a)(1) substitutions for "$47,000" of amounts of "$6,000", "$30,000", "$34,000", "$38,000", and "$42,500" in the case of gifts made after Dec. 31, 1976, and before July 1, 1977, after June 30, 1977, and before Jan. 1, 1978; after Dec. 31, 1977, and before Jan. 1, 1979, after Dec. 31, 1978, and before Jan. 1, 1980, and after Dec. 31, 1979, and before Jan. 1, 1981, respectively.

Subsec. (d). Pub. L. 97–34, §442(a)(5)(B), substituted "year" for "quarter" in two places.

Effective Date of 2010 Amendment

Pub. L. 111–312, title III, §301(b), Dec. 17, 2010, 124 Stat. 3300, provided that the amendment by section 301(b) is effective on and after Jan. 1, 2011.

Pub. L. 111–312, title III, §302(b)(1)(B), Dec. 17, 2010, 124 Stat. 3301, provided that: "The amendment made by this paragraph [amending this section] shall apply to gifts made after December 31, 2010."

Amendment by section 302(d)(2) of Pub. L. 111–312 applicable to estates of decedents dying, generation-skipping transfers, and gifts made, after Dec. 31, 2009, see section 302(f) of Pub. L. 111–312, set out as a note under section 2001 of this title.

Amendment by section 303(b)(1) of Pub. L. 111–312 applicable to estates of decedents dying and gifts made after Dec. 31, 2010, see section 303(c)(1) of Pub. L. 111–312, set out as a note under section 2010 of this title.

Effective Date of 2001 Amendment

Amendment by section 521(b)(1) of Pub. L. 107–16 applicable to estates of decedents dying, and gifts made, after Dec. 31, 2001, and amendment by section 521(b)(2) of Pub. L. 107–16 applicable to gifts made after Dec. 31, 2009, see section 521(e)(1), (2) of Pub. L. 107–16, set out as a note under section 2010 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 1981 Amendment

Pub. L. 97–34, title IV, §401(c)(2), Aug. 13, 1981, 95 Stat. 300, provided that: "The amendments made by subsection (b) [amending this section] shall apply to gifts made after such date [Dec. 31, 1981]."

Amendment by section 442(a)(5) of 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.

Savings Provision

For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.