Source: http://www4.law.cornell.edu/uscode/text/26/2632
Timestamp: 2013-12-11 10:24:06
Document Index: 70113790

Matched Legal Cases: ['§ 2632', '§ 2632', '§ 2632', '§ 1431', '§ 1014', '§ 561', '§ 561', '§ 561', '§ 561']

26 USC § 2632 - Special rules for allocation of GST exemption | Title 26 - Internal Revenue Code | U.S. Code | LII / Legal Information Institute
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26 USC § 2632 - Special rules for allocation of GST exemption
Time and manner of allocation (1)
Time Any allocation by an individual of his GST exemption under section 2631
(a) may be made at any time on or before the date prescribed for filing the estate tax return for such individual’s estate (determined with regard to extensions), regardless of whether such a return is required to be filed.
Manner The Secretary shall prescribe by forms or regulations the manner in which any allocation referred to in paragraph (1) is to be made.
Deemed allocation to certain lifetime direct skips (1)
In general If any individual makes a direct skip during his lifetime, any unused portion of such individual’s GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero. If the amount of the direct skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.
Unused portion For purposes of paragraph (1), the unused portion of an individual’s GST exemption is that portion of such exemption which has not previously been allocated by such individual (or treated as allocated under paragraph (1) or subsection (c)(1)).
Subsection not to apply in certain cases An individual may elect to have this subsection not apply to a transfer.
Deemed allocation to certain lifetime transfers to GST trusts (1)
In general If any individual makes an indirect skip during such individual’s lifetime, any unused portion of such individual’s GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero. If the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.
Unused portion For purposes of paragraph (1), the unused portion of an individual’s GST exemption is that portion of such exemption which has not previously been—
Indirect skip For purposes of this subsection, the term “indirect skip” means any transfer of property (other than a direct skip) subject to the tax imposed by chapter 12 made to a GST trust.
GST trust The term “GST trust” means a trust that could have a generation-skipping transfer with respect to the transferor unless—
the trust instrument provides that more than 25 percent of the trust corpus must be distributed to or may be withdrawn by one or more individuals who are non-skip persons—
the trust is a charitable lead annuity trust (within the meaning of section 2642
(e)(3)(A)) or a charitable remainder annuity trust or a charitable remainder unitrust (within the meaning of section 664
For purposes of this subparagraph, the value of transferred property shall not be considered to be includible in the gross estate of a non-skip person or subject to a right of withdrawal by reason of such person holding a right to withdraw so much of such property as does not exceed the amount referred to in section 2503
(b) with respect to any transferor, and it shall be assumed that powers of appointment held by non-skip persons will not be exercised.
Automatic allocations to certain GST trusts For purposes of this subsection, an indirect skip to which section 2642
(f) applies shall be deemed to have been made only at the close of the estate tax inclusion period. The fair market value of such transfer shall be the fair market value of the trust property at the close of the estate tax inclusion period.
Applicability and effect (A)
In general An individual—
may elect to have this subsection not apply to—
Elections (i)
Retroactive allocations (1)
is a lineal descendant of a grandparent of the transferor or of a grandparent of the transferor’s spouse or former spouse, and
Special rules If the allocation under paragraph (1) by the transferor is made on a gift tax return filed on or before the date prescribed by section 6075
(b) for gifts made within the calendar year within which the non-skip person’s death occurred—
the value of such transfer or transfers for purposes of section 2642
(a) shall be determined as if such allocation had been made on a timely filed gift tax return for each calendar year within which each transfer was made,
the amount of the transferor’s unused GST exemption available to be allocated shall be determined immediately before such death.
Future interest For purposes of this subsection, a person has a future interest in a trust if the trust may permit income or corpus to be paid to such person on a date or dates in the future.
Allocation of unused GST exemption (1)
In general Any portion of an individual’s GST exemption which has not been allocated within the time prescribed by subsection (a) shall be deemed to be allocated as follows—
first, to property which is the subject of a direct skip occurring at such individual’s death, and
second, to trusts with respect to which such individual is the transferor and from which a taxable distribution or a taxable termination might occur at or after such individual’s death.
Allocation within categories (A)
In general The allocation under paragraph (1) shall be made among the properties described in subparagraph (A) thereof and the trusts described in subparagraph (B) thereof, as the case may be, in proportion to the respective amounts (at the time of allocation) of the nonexempt portions of such properties or trusts.
Nonexempt portion For purposes of subparagraph (A), the term “nonexempt portion” means the value (at the time of allocation) of the property or trust, multiplied by the inclusion ratio with respect to such property or trust.
(Added Pub. L. 99–514, title XIV, § 1431(a),Oct. 22, 1986, 100 Stat. 2721; amended Pub. L. 100–647, title I, § 1014(g)(16),Nov. 10, 1988, 102 Stat. 3566; Pub. L. 107–16, title V, § 561(a), (b),June 7, 2001, 115 Stat. 86, 89.)
2001—Subsec. (b)(2). Pub. L. 107–16, §§ 561(b), 901, temporarily substituted “or subsection (c)(1)” for “with respect to a prior direct skip”. See Effective and Termination Dates of 2001 Amendment note below.
Subsecs. (c) to (e). Pub. L. 107–16, §§ 561(a), 901, temporarily added subsecs. (c) and (d) and redesignated former subsec. (c) as (e). See Effective and Termination Dates of 2001 Amendment note below.
1988—Subsec. (b)(2). Pub. L. 100–647substituted “paragraph (1) with respect to a prior direct skip)” for “paragraph (1)) with respect to a prior direct skip”.
Pub. L. 107–16, title V, § 561(c),June 7, 2001, 115 Stat. 89, provided that: