2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART III - Decedent’s Estate and Gifts (§§ 31001 — 31176) › Chapter 1024 - Gift Tax (§§ 31081 — 31105) › Subchapter B - The Term “Gift” (§§ 31091 — 31105) › § 31092 - Deduction in connection with properties located in Puerto Rico

(a) The value of property located in Puerto Rico, as defined and listed in this section, on the date of the transfer, shall be deductible from any transfer by gift made by a Puerto Rico resident.
(b) For purposes of this section, the term “property located in Puerto Rico” means and shall include the following:
(1) Except as provided in this section, all real and personal property located in Puerto Rico belonging to a Puerto Rico resident.
As for personal property of the kinds described in clauses (2)—(8) of this subsection, the deduction shall be limited to those properties that meet the description stated in such clauses.
(2) Stock certificates issued by any domestic corporation or partnership; Provided, That when the donor holds over ten percent (10%) of the stock (by value or voting power) in said corporation or partnership, such stock shall be deemed to be property located in Puerto Rico only if the domestic corporation or partnership earns not less than eighty percent (80%) of its gross income for the three (3)-year period ending at the close of its taxable year before the date the gift was made, or the period that may correspond from the date of existence of such corporation or partnership, from the exploitation of a trade or business. For purposes of determining if a domestic corporation or partnership meets the requirement of having eighty percent (80%) or more of its gross income is earned from exploitation of a trade or business, the gross income of any corporation or partnership in which such domestic corporation or partnership holds, directly or indirectly, over fifty percent (50%) of the stock (by value or voting power).
(3) Stock certificates issued by any foreign corporation or partnership, when not less than eighty percent (80%) of the gross income of such foreign corporation or partnership as of the three (3)-year period ending at the close of its taxable year before the date the gift was made, or the period that may correspond from the date of existence of such corporation or partnership, when such income was actually earned from the exploitation of a trade or business in Puerto Rico pursuant to the provisions of §§ 30041 et seq. of this title; Provided, That when the donor holds over ten percent (10%) of stock (by value or voting power) in such foreign corporation or partnership, for purposes of determining if such corporation or partnership meets the requirement of having actually earned eighty percent (80%) of its income from the exploitation of a trade or business in Puerto Rico for the period mentioned above, the gross income of any foreign corporation or partnership in which such foreign corporation or partnership holds, whether directly or indirectly, over fifty percent (50%) of stock (by value or voting power).
(4) Bonds, notes or other debentures issued by:
(A) The Government of Puerto Rico.
(B) Municipalities located within the jurisdiction of the Government of Puerto Rico.
(C) Public authorities or corporations of the Government of Puerto Rico and its municipalities, which belong to a donor who is a Puerto Rico resident.
(5) Bonds, notes or other debentures of a Puerto Rico resident or domestic corporation or partnership, or secured with real property located in Puerto Rico, or belonging to a foreign corporation or partnership when not less than eighty percent (80%) of the gross income of such foreign corporation or partnership for the three (3)-year period ending at the close of its taxable year before the transfer by gift, was earned from sources in Puerto Rico under the provisions of §§ 30041 et seq. of this title, belonging to a Puerto Rico resident.
(6) Annuity contracts as defined under §§ 30041 et seq. of this title and individual retirement accounts that are eligible under such sections.
(7) Deposits, certificates of deposit and savings accounts with persons engaged in the banking business in Puerto Rico, insofar as the accounting for such deposits, certificates or savings accounts is kept by branches in Puerto Rico.
(8) Deposits, certificates of deposit, and savings accounts in savings and loans associations, credit unions or similar institutions conducting business in Puerto Rico, insofar as the accounting for such deposits, certificates or savings accounts is kept by branches in Puerto Rico.
History —Jan. 31, 2011, No. 1, § 2042.02, retroactive to Jan. 1, 2011.