Source: https://www.law.cornell.edu/uscode/text/26/530
Timestamp: 2019-04-23 12:45:36+00:00

Document:
A Coverdell education savings account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, the Coverdell education savings account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).
except in the case of rollover contributions, if such contribution would result in aggregate contributions for the taxable year exceeding $2,000.
The trustee is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan.
No part of the trust assets will be invested in life insurance contracts.
The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.
Except as provided in subsection (d)(7), any balance to the credit of the designated beneficiary on the date on which the beneficiary attains age 30 shall be distributed within 30 days after such date to the beneficiary or, if the beneficiary dies before attaining age 30, shall be distributed within 30 days after the date of death of such beneficiary.
The age limitations in subparagraphs (A)(ii) and (E), and paragraphs (5) and (6) of subsection (d), shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).
qualified elementary and secondary education expenses (as defined in paragraph (3)).
Such term shall include any contribution to a qualified tuition program (as defined in section 529(b)) on behalf of the designated beneficiary (as defined in section 529(e)(1)); but there shall be no increase in the investment in the contract for purposes of applying section 72 by reason of any portion of such contribution which is not includible in gross income by reason of subsection (d)(2).
expenses for the purchase of any computer technology or equipment or Internet access and related services, if such technology, equipment, or services are to be used by the beneficiary and the beneficiary’s family during any of the years the beneficiary is in school.
An individual shall be deemed to have made a contribution to an education individual retirement account on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).
$15,000 ($30,000 in the case of a joint return).
For purposes of paragraph (1), the term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
Any distribution shall be includible in the gross income of the distributee in the manner as provided in section 72.
No amount shall be includible in gross income under paragraph (1) if the qualified education expenses of the designated beneficiary during the taxable year are not less than the aggregate distributions during the taxable year.
If such aggregate distributions exceed such expenses during the taxable year, the amount otherwise includible in gross income under paragraph (1) shall be reduced by the amount which bears the same ratio to the amount which would be includible in gross income under paragraph (1) (without regard to this subparagraph) as the qualified education expenses bear to such aggregate distributions.
the taxpayer shall allocate such expenses among such distributions for purposes of determining the amount of the exclusion under subparagraph (A) and section 529(c)(3)(B).
No deduction, credit, or exclusion shall be allowed to the taxpayer under any other section of this chapter for any qualified education expenses to the extent taken into account in determining the amount of the exclusion under this paragraph.
Rules similar to the rules of paragraphs (2), (4), and (5) of section 529(c) shall apply for purposes of this section.
The tax imposed by this chapter for any taxable year on any taxpayer who receives a payment or distribution from a Coverdell education savings account which is includible in gross income shall be increased by 10 percent of the amount which is so includible.
an amount which is includible in gross income solely by application of paragraph (2)(C)(i)(II) for the taxable year.
such distribution is accompanied by the amount of net income attributable to such excess contribution.
Paragraph (1) shall not apply to any amount paid or distributed from a Coverdell education savings account to the extent that the amount received is paid, not later than the 60th day after the date of such payment or distribution, into another Coverdell education savings account for the benefit of the same beneficiary or a member of the family (within the meaning of section 529(e)(2)) of such beneficiary who has not attained age 30 as of such date. The preceding sentence shall not apply to any payment or distribution if it applied to any prior payment or distribution during the 12-month period ending on the date of the payment or distribution.
Any change in the beneficiary of a Coverdell education savings account shall not be treated as a distribution for purposes of paragraph (1) if the new beneficiary is a member of the family (as so defined) of the old beneficiary and has not attained age 30 as of the date of such change.
Rules similar to the rules of paragraphs (7) and (8) of section 220(f) shall apply. In applying the preceding sentence, members of the family (as so defined) of the designated beneficiary shall be treated in the same manner as the spouse under such paragraph (8).
In any case in which a distribution is required under subsection (b)(1)(E), any balance to the credit of a designated beneficiary as of the close of the 30-day period referred to in such subsection for making such distribution shall be deemed distributed at the close of such period.
the amounts so received which were contributed to a Roth IRA under section 408A(e)(2) or to another Coverdell education savings account.
The last sentence of paragraph (5) shall not apply with respect to amounts treated as a rollover by subparagraph (A).
For purposes of applying section 72 in the case of a distribution which is includible in gross income under paragraph (1), the amount treated as a rollover by reason of subparagraph (A) shall be treated as investment in the contract.
Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to any Coverdell education savings account.
For purposes of this section, a custodial account shall be treated as a trust if the assets of such account are held by a bank (as defined in section 408(n)) or another person who demonstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the requirements of this section, and if the custodial account would, except for the fact that it is not a trust, constitute an account described in subsection (b)(1). For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof.
The trustee of a Coverdell education savings account shall make such reports regarding such account to the Secretary and to the beneficiary of the account with respect to contributions, distributions, and such other matters as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required.
The date of the enactment of this section, referred to in subsec. (d)(4)(B)(iv), is the date of enactment of Pub. L. 105–34, which enacted this section and was approved Aug. 5, 1997.
2018—Subsec. (b)(3)(A)(iii). Pub. L. 115–141, § 401(b)(23)(A), struck out “(as defined in section 170(e)(6)(F)(i))” before “or Internet”.
Subsec. (b)(3)(C). Pub. L. 115–141, § 401(b)(23)(B), added subpar. (C).
Subsec. (d)(2)(C). Pub. L. 115–141, § 101(l)(16), substituted “American Opportunity” for “Hope” in heading.
Subsec. (d)(9)(B). Pub. L. 115–141, § 401(a)(131), substituted “by” for “by the”.
2008—Subsec. (d)(9). Pub. L. 110–245 added par. (9).
2005—Subsec. (b)(2)(A)(ii). Pub. L. 109–135, § 412(ff)(2), substituted “paragraph (3)” for “paragraph (4)”.
2004—Subsec. (d)(2)(C)(i). Pub. L. 108–311, § 404(a), struck out “higher” after “qualified” in introductory provisions.
Subsec. (d)(4)(B)(iii). Pub. L. 108–311, § 406(b), substituted “designated beneficiary” for “account holder”.
2003—Subsec. (d)(4)(B)(iv), (v). Pub. L. 108–121 added cl. (iv) and redesignated former cl. (iv) as (v).
2002—Subsec. (d)(4)(B)(iv). Pub. L. 107–147 substituted “by application of paragraph (2)(C)(i)(II)” for “because the taxpayer elected under paragraph (2)(C) to waive the application of paragraph (2)”.
2001—Pub. L. 107–22, § 1(a)(5), amended section catchline generally, substituting “Coverdell education savings” for “Education individual retirement”.
Subsec. (a). Pub. L. 107–22, § 1(a)(2), substituted “A Coverdell education savings account” for “An education individual retirement account” and “the Coverdell education savings account” for “the education individual retirement account”.
Subsec. (b)(1). Pub. L. 107–22, § 1(a)(1), (3), in heading, substituted “Coverdell education savings account” for “Education individual retirement account” and, in introductory provisions, substituted “ ‘Coverdell education savings account’ ” for “ ‘education individual retirement account’ ” and “designated as a Coverdell education savings account” for “designated as an education individual retirement account”.
Pub. L. 107–16, § 401(d), inserted concluding provisions.
Pub. L. 107–16, § 401(c)(3)(A), struck out “higher” before “education expenses” in introductory provisions.
Subsec. (b)(1)(A)(iii). Pub. L. 107–16, § 401(a)(1), substituted “$2,000” for “$500”.
Subsec. (b)(2). Pub. L. 107–16, § 401(c)(1), amended heading and text of par. (2) generally, substituting present provisions for provisions which defined “qualified higher education expenses” as having the meaning given such term by section 529(e)(3), reduced as provided in section 25A(g)(2), and including amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program for the benefit of the beneficiary of the account.
Subsec. (b)(2)(B). Pub. L. 107–16, § 402(a)(4)(A), (C), in heading, substituted “Qualified tuition” for “Qualified State tuition” and in text, substituted “qualified tuition” for “qualified State tuition”.
Subsec. (b)(4). Pub. L. 107–16, § 401(c)(2), added par. (4).
Subsec. (b)(5). Pub. L. 107–16, § 401(f)(1), added par. (5).
Subsec. (c)(1). Pub. L. 107–16, § 401(e), substituted “In the case of a contributor who is an individual, the maximum amount the contributor” for “The maximum amount which a contributor” in introductory provisions.
Subsec. (c)(1)(A)(ii). Pub. L. 107–16, § 401(b)(1), substituted “$190,000” for “$150,000”.
Subsec. (c)(1)(B). Pub. L. 107–16, § 401(b)(2), substituted “$30,000” for “$10,000”.
Subsec. (d)(2). Pub. L. 107–16, § 401(c)(3)(B), struck out “higher” before “education” in heading.
Subsec. (d)(2)(A), (B). Pub. L. 107–16, § 401(c)(3)(A), struck out “higher” before “education”.
Subsec. (d)(2)(D). Pub. L. 107–16, § 401(g)(2)(C), in heading, substituted “deduction, credit, or exclusion” for “credit or deduction” and in text, substituted “, credit, or exclusion” for “or credit”.
Subsec. (d)(4)(A). Pub. L. 107–22, § 1(a)(1), substituted “a Coverdell education savings account” for “an education individual retirement account”.
Subsec. (d)(4)(C). Pub. L. 107–16, § 401(f)(2)(B), substituted “certain date” for “due date of return” in heading.
Subsec. (d)(4)(C)(i). Pub. L. 107–16, § 401(f)(2)(A), added cl. (i) and struck out former cl. (i) which read as follows: “such distribution is made on or before the day prescribed by law (including extensions of time) for filing the beneficiary’s return of tax for the taxable year or, if the beneficiary is not required to file such a return, the 15th day of the 4th month of the taxable year following the taxable year; and”.
Subsec. (d)(5). Pub. L. 107–22, § 1(a)(1), (4), substituted “distributed from a Coverdell education savings account” for “distributed from an education individual retirement account” and “another Coverdell education savings account” for “another education individual retirement account”.
Subsec. (d)(6). Pub. L. 107–22, § 1(a)(1), substituted “a Coverdell education savings account” for “an education individual retirement account”.
Subsec. (e). Pub. L. 107–22, § 1(a)(4), substituted “Coverdell education savings account” for “education individual retirement account”.
Subsec. (h). Pub. L. 107–22, § 1(a)(1), substituted “a Coverdell education savings account” for “an education individual retirement account”.
2000—Subsec. (d)(4)(B)(iii). Pub. L. 106–554 substituted a comma for a semicolon before “or” at end.
1998—Subsec. (b)(1). Pub. L. 105–206, § 6004(d)(1), inserted “an individual who is” before “the designated beneficiary” in introductory provisions.
Subsec. (d)(1). Pub. L. 105–206, § 6004(d)(3)(A), substituted “section 72” for “section 72(b)”.
Subsec. (d)(2)(D). Pub. L. 105–206, § 6004(d)(5), added subpar. (D).
Subsec. (d)(4)(B)(iv). Pub. L. 105–206, § 6004(d)(6), added cl. (iv).
“(i) such distribution is received on or before the day prescribed by law (including extensions of time) for filing such contributor’s return for such taxable year, and”.
Subsec. (d)(6). Pub. L. 105–206, § 6004(d)(8)(B), inserted before period at end “and has not attained age 30 as of the date of such change”.
Subsec. (d)(8). Pub. L. 105–206, § 6004(d)(2)(C), added par. (8).
Amendment by section 101(l)(16) of Pub. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Pub. L. 114–113, to which such amendment relates, see section 101(s) of Pub. L. 115–141, set out as a note under section 24 of this title.
Amendment by Pub. L. 110–245 applicable with respect to deaths from injuries occurring on or after June 17, 2008, with provision for application of amendment to deaths from injuries occurring on or after Oct. 7, 2001, and before June 17, 2008, see section 109(d)(1), (2) of Pub. L. 110–245, set out as a note under section 408A of this title.
Amendment by section 404(a) of Pub. L. 108–311 effective as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16, to which such amendment relates, see section 404(f) of Pub. L. 108–311, set out as a note under section 45A of this title.
Amendment by section 406(b) of Pub. L. 108–311 effective as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 406(h) of Pub. L. 108–311, set out as a note under section 55 of this title.
Amendment by section 401(a)(1), (b)–(g)(1), (2)(C) of Pub. L. 107–16 applicable to taxable years beginning after Dec. 31, 2001, see section 401(h) of Pub. L. 107–16, set out as a note under section 25A of this title.
Amendment by section 402(a)(4)(A), (C) of Pub. L. 107–16 applicable to taxable years beginning after Dec. 31, 2001, see section 402(h) of Pub. L. 107–16, set out as a note under section 72 of this title.
Section applicable to taxable years beginning after Dec. 31, 1997, see section 213(f) of Pub. L. 105–34, set out as an Effective Date of 1997 Amendment note under section 26 of this title.
For provisions that nothing in amendment by section 401(b)(23) of Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.

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