Sec. 684. Recognition Of Gain On Certain Transfers To Certain Foreign Trusts And Estates

(Added by Pub. L. 105-34, title XI, Sec. 1131(b), Aug. 5, 1997, 111 Stat 788; amended by Pub. L. 107-16, title V, Sec. 542, June 7, 2001, 115 Stat. 38; Pub. L. 111-312, title III, Sec. 301(a), Dec. 17, 2010, 124 Stat. 3296.)

BACKGROUND NOTES

EFFECTIVE DATE

Effective on the date of the enactment of Pub. L. 105-34 [enacted: Aug. 5, 1997].

AMENDMENTS

2010 - Section 684. Pub. L. 111-312, Sec. 301(a), amended Sec. 684 to read as it would read if subtitle E of title V of Pub. L. 107-16 had never been enacted. Sec. 684, as amended by Pub. L. 107-16, Sec. 542(e)(1), would have read as follows:

“Sec. 684. Recognition Of Gain On Certain Transfers To Certain Foreign Trusts And Estates And Nonresident Aliens

“(a) In General.— Except as provided in regulations, in the case of any transfer of property by a United States person to a foreign estate or trust or to a nonresident alien, for purposes of this subtitle, such transfer shall be treated as a sale or exchange for an amount equal to the fair market value of the property transferred, and the transferor shall recognize as gain the excess of—

“(1) the fair market value of the property so transferred, over

“(2) the adjusted basis (for purposes of determining gain) of such property in the hands of the transferor.

“(b) Exception.—

“(1) Transfers To Certain Trusts Subsection (a) shall not apply to a transfer to a trust by a United States person to the extent that any United States person is treated as the owner of such trust under section 671.

“(2) Lifetime Transfers To Nonresident Aliens.—Subsection (a) shall not apply to a lifetime transfer to a nonresident alien.

“(c) Treatment Of Trusts Which Become Foreign Trusts.— If a trust which is not a foreign trust becomes a foreign trust, such trust shall be treated for purposes of this section as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust.”

2001 - Section 684. Pub. L. 107-16, Sec. 542(e)(1), amended section 684 by inserting “and nonresident aliens” after “estates” in the heading.

Subsec. (a). Pub. L. 107-16, Sec. 542(e)(1), amended subsec. (a) by inserting “or to a nonresident alien” after “or trust”.

Subsec. (b). Pub. L. 107-16, Sec. 542(e)(1), amended subsec. (b). Before amendment it read as follows:

“(b) Exception.--Subsection (a) shall not apply to a transfer to a trust by a United States person to the extent that any person is treated as the owner of such trust under section 671.”

EFFECTIVE DATE OF 2010 AMENDMENT

Amendment by Sec. 301(a) of Pub. L. 111-312 effective for estates of decedents dying, and transfers made, after December 31, 2009. Section 304 of Pub. L. 111-312 provided the following sunset provision:

“SEC. 304. APPLICATION OF EGTRRA SUNSET TO THIS TITLE. Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall apply to the amendments made by this section.” Note that Pub. L. 112-240, Sec. 101(a)(1), struck title IX of Pub. L. 107-16 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.

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.”

EFFECTIVE DATE OF 2001 AMENDMENTS

Amendments by Sec. 542(e)(1) of Pub. L. 107-16 effective for transfers after December 31, 2009.

Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358 and Pub. L. 111-312, Sec. 101(a),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).”