I.R.C. § 2612(a) Taxable Termination
I.R.C. § 2612(a)(1) General Rule —
For purposes of this chapter, the term “taxable termination"
means the termination (by death, lapse of time, release of power, or otherwise) of
an interest in property held in a trust unless—
I.R.C. § 2612(a)(1)(A) —
immediately after such termination, a non-skip person has an interest in such property,
or
I.R.C. § 2612(a)(1)(B) —
at no time after such termination may a distribution (including distributions on
termination) be made from such trust to a skip person.
I.R.C. § 2612(a)(2) Certain Partial Terminations Treated As Taxable —
If, upon the termination of an interest in property held in trust by reason of the
death of a lineal descendant of the transferor, a specified portion of the trust's
assets are distributed to 1 or more skip persons (or 1 or more trusts for the exclusive
benefit of such persons), such termination shall constitute a taxable termination
with respect to such portion of the trust property.
I.R.C. § 2612(b) Taxable Distribution —
For purposes of this chapter, the term “taxable distribution"
means any distribution from a trust to a skip person (other than a taxable termination
or a direct skip).
I.R.C. § 2612(c) Direct Skip —
For purposes of this chapter—
I.R.C. § 2612(c)(1) In General —
The term “direct skip” means a transfer subject to a tax imposed by chapter 11 or
12 of an interest in property to a skip person.
I.R.C. § 2612(c)(2) Look-Thru Rules Not To Apply —
Solely for purposes of determining whether any transfer to a trust is a direct skip,
the rules of section 2651(f)(2) shall not apply.
(Added by Pub. L. 94-455, title XX, 2006(a), Oct. 4, 1976, 90 Stat. 1883, and amended Pub. L. 99-514, title XIV, 1431(a), Oct. 22, 1986, 100 Stat. 2719; Pub. L. 100-647, title I, 1014(g)(5)(B), (7), (15), Nov. 10, 1988, 102 Stat. 3564-3566; Pub. L. 105-34, title V, Sec. 511, Aug. 5, 1997, 111 Stat 788.)
BACKGROUND NOTES
AMENDMENTS
1997--Subsec. (c)(2). Pub. L. 105-34, Sec. 511(b)(1) struck par. (2). Prior to amendment it read as follows:
“(2) Special rule for transfers to grandchildren
For purposes of determining whether any transfer is a direct skip, if--
(A) an individual is a grandchild of the transferor (or the transferor's spouse or
former spouse), and
(B) as of the time of the transfer, the parent of such individual who is a lineal
descendant of the transferor
(or the transferor's spouse or former spouse) is dead, such individual shall be treated
as if such individual were a child of the transferor and all of that grandchild's
children shall be treated as if they were grandchildren of the transferor. In the
case of lineal descendants below a grandchild, the preceding sentence may be reapplied.
If any transfer of property to a trust would be a direct skip but for this paragraph,
any generation assignment under this paragraph shall apply also for purposes of applying
this chapter to transfers from the portion of the trust attributable to such property.”
Subsec. (c)(3). Pub. L. 105-34, Sec. 511(b), redesignated par. (3) as par. (2) and substituted “section 2651(f)(2)” for “section
2651(e)(2)”.
1988--Subsec. (a)(2). Pub. L. 100-647, 1014(g)(15), amended par. (2) generally. Prior to amendment, par. (2) read as follows:
“If, upon the termination of an interest in property held in a trust, a specified
portion of the trust assets are distributed to skip persons who are lineal descendants
of the holder of such interest (or to 1 or more trusts for the exclusive benefit of
such persons), such termination shall constitute a taxable termination with respect
to such portion of the trust property.”
Subsec. (c)(2). Pub. L. 100-647, 1014(g)(7), in closing provisions, inserted at end “If any transfer of property
to a trust would be a direct skip but for this paragraph, any generation assignment
under this paragraph shall apply also for purposes of applying this chapter to transfers
from the portion of the trust attributable to such property.”
Subsec. (c)(3). Pub. L. 100-647, 1014(g)(5)(B), added par. (3).
1986--Pub. L. 99-514 amended section generally, substituting provisions covering definition and application
of “taxable termination”, “taxable distribution”, and “direct skip” for former provisions
which indicated who the “deemed transferor” would be for purposes of this chapter
and that, for purposes of determining the person deemed the transferor, a parent related
to the grantor of a trust by blood or adoption was to be deemed more closely related
than a parent related to a grantor by marriage.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 511(b) of Pub. L. 105-34 applicable to terminations, distributions, and transfers occurring after December
31, 1997.
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 OF 1986 AMENDMENT
Section applicable to generation-skipping transfers
(within the meaning of section 2611 of this title) made after Oct. 22, 1986, except
as otherwise provided, see section 1433 of Pub. L. 99-514, set out as a note under section 2601 of this title.
REINSTATEMENT OF ESTATE TAX; REPEAL OF CARRYOVER BASIS
Section 301 of Pub. L. 111-312 provided:
“(a)
IN GENERAL.—Each provision of law amended by subtitle A or E of title V of the Economic
Growth and Tax Relief Reconciliation Act of 2001 is amended to read as such provision
would read if such subtitle had never been enacted.
“(b)
CONFORMING AMENDMENT.—On and after January 1, 2011, paragraph
(1) of section 2505(a) of the Internal Revenue Code of 1986 is amended to read as such paragraph would read if section 521(b)(2) of the
Economic Growth and Tax Relief Reconciliation Act of 2001 had never been enacted.
“(c)
SPECIAL ELECTION WITH RESPECT TO ESTATES OF DECEDENTS DYING IN 2010.—Notwithstanding
subsection (a), in the case of an estate of a decedent dying after December 31, 2009,
and before January 1, 2011, the executor (within the meaning of section 2203 of the Internal Revenue Code of 1986) may elect to apply such Code as though the amendments made by subsection
(a) do not apply with respect to chapter 11 of such Code and with respect to property
acquired or passing from such decedent (within the meaning of section 1014(b) of such
Code). Such election shall be made at such time and in such manner as the Secretary
of the Treasury or the Secretary's delegate shall provide. Such an election once made
shall be revocable only with the consent of the Secretary of the Treasury or the Secretary's
delegate. For purposes of section 2652(a)(1) of such Code, the determination of whether
any property is subject to the tax imposed by such chapter 11 shall be made without
regard to any election made under this subsection.
“(d)
EXTENSION OF TIME FOR PERFORMING CERTAIN ACTS.—
“
(1) ESTATE TAX.—In the case of the estate of a decedent dying after December 31, 2009,
and before the date of the enactment of this Act, the due date for—
“(A)
filing any return under section 6018 of the Internal Revenue Codeof 1986 (including any election required to be made on such a return) as such section
is in effect after the date of the enactment of this Act without regard to any election
under subsection (c),
“(B)
making any payment of tax under chapter 11 of such Code, and
“(C)
making any disclaimer described in section 2518(b) of such Code of an interest in
property passing by reason of the death of such decedent, shall not be earlier than
the date which is 9 months after the date of the enactment of this Act.
“(2)
GENERATION-SKIPPING TAX.—In the case of any generation-skipping transfer made after
December 31, 2009, and before the date of the enactment of this Act, the due date
for filing any return under section 2662 of the Internal Revenue Code of 1986 (including any election required to be made on such a return)
shall not be earlier than the date which is 9 months after the date of the enactment
of this Act.
“(e)
EFFECTIVE DATE.—Except as otherwise provided in this section, the amendments made
by this section shall apply to estates of decedents dying, and transfers made, after
December 31, 2009.”
TERMINATION
Section 501(b) (Generation-Skipping Transfer Tax Repeal) of Pub. L. 107-16 added Code Sec. 2664, which states that chapter 13 of subtitle B shall not apply
to generation-skipping transfers after December 31, 2009.
Note, however, that Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358 and Pub. L. 111-312, and struck by Pub. L. 112-240, Sec. 101(a)(1) (effective for taxable, plan, or limitation years beginning after Dec. 31, 2012,
and estates of decedents dying, gifts made, or generation skipping transfers after
Dec. 31, 2012), provided that:
“(a)
IN GENERAL.--All provisions of, and amendments made by, this Act shall not apply--
“(1) to taxable, plan, or limitation years beginning after December 31, 2012, or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation
skipping transfers, after December 31, 2012.
“(b)
APPLICATION OF CERTAIN LAWS.--The Internal Revenue Code of 1986 and the Employee Retirement
Income Security Act of 1974 shall be applied and administered to years, estates, gifts,
and transfers described in subsection (a) as if the provisions and amendments described
in subsection (a) had never been enacted.
“(c)
EXCEPTION.-Subsection (a) shall not apply to section 803 (relating to no federal income
tax on restitution received by victims of the Nazi regime or their heirs or estates).”
