Internal Revenue Code:Sec. 2031. Definition of gross estate
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle B - Estate and Gift Taxes
CHAPTER 11 - ESTATE TAX
Subchapter A - Estates of Citizens or Residents
PART III - GROSS ESTATE
Statute
Sec. 2031. Definition of gross estate
(a) General
The value of the gross estate of the decedent shall be determined
by including to the extent provided for in this part, the value at
the time of his death of all property, real or personal, tangible
or intangible, wherever situated.
(b) Valuation of unlisted stock and securities
In the case of stock and securities of a corporation the value of
which, by reason of their not being listed on an exchange and by
reason of the absence of sales thereof, cannot be determined with
reference to bid and asked prices or with reference to sales
prices, the value thereof shall be determined by taking into
consideration, in addition to all other factors, the value of stock
or securities of corporations engaged in the same or a similar line
of business which are listed on an exchange.
(c) Estate tax with respect to land subject to a qualified
conservation easement
(1) In general
If the executor makes the election described in paragraph (6),
then, except as otherwise provided in this subsection, there
shall be excluded from the gross estate the lesser of -
(A) the applicable percentage of the value of land subject to
a qualified conservation easement, reduced by the amount of any
deduction under section 2055(f) with respect to such land, or
(B) the exclusion limitation.
(2) Applicable percentage
For purposes of paragraph (1), the term ''applicable
percentage'' means 40 percent reduced (but not below zero) by 2
percentage points for each percentage point (or fraction thereof)
by which the value of the qualified conservation easement is less
than 30 percent of the value of the land (FOOTNOTE 1) (determined
without regard to the value of such easement and reduced by the
value of any retained development right (as defined in paragraph
(5)). The values taken into account under the preceding sentence
shall be such values as of the date of the contribution referred
to in paragraph (8)(B).
(FOOTNOTE 1) So in original. No closing parenthesis was
enacted.
(3) Exclusion limitation
For purposes of paragraph (1), the exclusion limitation is the
limitation determined in accordance with the following table:
In the case of estates of The exclusion
decedents dying during: limitation is:
1998 $100,000
1999 $200,000
2000 $300,000
2001 $400,000
2002 or thereafter $500,000.
(4) Treatment of certain indebtedness
(A) In general
The exclusion provided in paragraph (1) shall not apply to
the extent that the land is debt-financed property.
(B) Definitions
For purposes of this paragraph -
(i) Debt-financed property
The term ''debt-financed property'' means any property with
respect to which there is an acquisition indebtedness (as
defined in clause (ii)) on the date of the decedent's death.
(ii) Acquisition indebtedness
The term ''acquisition indebtedness'' means, with respect
to debt-financed property, the unpaid amount of -
(I) the indebtedness incurred by the donor in acquiring
such property,
(II) the indebtedness incurred before the acquisition of
such property if such indebtedness would not have been
incurred but for such acquisition,
(III) the indebtedness incurred after the acquisition of
such property if such indebtedness would not have been
incurred but for such acquisition and the incurrence of
such indebtedness was reasonably foreseeable at the time of
such acquisition, and
(IV) the extension, renewal, or refinancing of an
acquisition indebtedness.
(5) Treatment of retained development right
(A) In general
Paragraph (1) shall not apply to the value of any development
right retained by the donor in the conveyance of a qualified
conservation easement.
(B) Termination of retained development right
If every person in being who has an interest (whether or not
in possession) in the land executes an agreement to extinguish
permanently some or all of any development rights (as defined
in subparagraph (D)) retained by the donor on or before the
date for filing the return of the tax imposed by section 2001,
then any tax imposed by section 2001 shall be reduced
accordingly. Such agreement shall be filed with the return of
the tax imposed by section 2001. The agreement shall be in such
form as the Secretary shall prescribe.
(C) Additional tax
Any failure to implement the agreement described in
subparagraph (B) not later than the earlier of -
(i) the date which is 2 years after the date of the
decedent's death, or
(ii) the date of the sale of such land subject to the
qualified conservation easement,
shall result in the imposition of an additional tax in the
amount of the tax which would have been due on the retained
development rights subject to such agreement. Such additional
tax shall be due and payable on the last day of the 6th month
following such date.
(D) Development right defined
For purposes of this paragraph, the term ''development
right'' means any right to use the land subject to the
qualified conservation easement in which such right is retained
for any commercial purpose which is not subordinate to and
directly supportive of the use of such land as a farm for
farming purposes (within the meaning of section 2032A(e)(5)).
(6) Election
The election under this subsection shall be made on or before
the due date (including extensions) for filing the return of tax
imposed by section 2001 and shall be made on such return. Such
an election, once made, shall be irrevocable.
(7) Calculation of estate tax due
An executor making the election described in paragraph (6)
shall, for purposes of calculating the amount of tax imposed by
section 2001, include the value of any development right (as
defined in paragraph (5)) retained by the donor in the conveyance
of such qualified conservation easement. The computation of tax
on any retained development right prescribed in this paragraph
shall be done in such manner and on such forms as the Secretary
shall prescribe.
(8) Definitions
For purposes of this subsection -
(A) Land subject to a qualified conservation easement
The term ''land subject to a qualified conservation
easement'' means land -
(i) which is located in the United States or any possession
of the United States,
(ii) which was owned by the decedent or a member of the
decedent's family at all times during the 3-year period
ending on the date of the decedent's death, and
(iii) with respect to which a qualified conservation
easement has been made by an individual described in
subparagraph (C), as of the date of the election described in
paragraph (6).
(B) Qualified conservation easement
The term ''qualified conservation easement'' means a
qualified conservation contribution (as defined in section
170(h)(1)) of a qualified real property interest (as defined in
section 170(h)(2)(C)), except that clause (iv) of section
170(h)(4)(A) shall not apply, and the restriction on the use of
such interest described in section 170(h)(2)(C) shall include a
prohibition on more than a de minimis use for a commercial
recreational activity.
(C) Individual described
An individual is described in this subparagraph if such
individual is -
(i) the decedent,
(ii) a member of the decedent's family,
(iii) the executor of the decedent's estate, or
(iv) the trustee of a trust the corpus of which includes
the land to be subject to the qualified conservation
easement.
(D) Member of family
The term ''member of the decedent's family'' means any member
of the family (as defined in section 2032A(e)(2)) of the
decedent.
(9) Treatment of easements granted after death
In any case in which the qualified conservation easement is
granted after the date of the decedent's death and on or before
the due date (including extensions) for filing the return of tax
imposed by section 2001, the deduction under section 2055(f) with
respect to such easement shall be allowed to the estate but only
if no charitable deduction is allowed under chapter 1 to any
person with respect to the grant of such easement.
(10) Application of this section to interests in partnerships,
corporations, and trusts
This section shall apply to an interest in a partnership,
corporation, or trust if at least 30 percent of the entity is
owned (directly or indirectly) by the decedent, as determined
under the rules described in section 2057(e)(3).
(d) Cross reference
For executor's right to be furnished on request a statement
regarding any valuation made by the Secretary within the gross
estate, see section 7517.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 380; Pub. L. 87-834, Sec.
18(a)(1), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title XX,
Sec. 2008(a)(2)(A), Oct. 4, 1976, 90 Stat. 1891; Pub. L. 105-34,
title V, Sec. 508(a), Aug. 5, 1997, 111 Stat. 857; Pub. L. 105-206,
title VI, Sec. 6007(g), July 22, 1998, 112 Stat. 810; Pub. L.
105-277, div. J, title IV, Sec. 4006(c)(3), Oct. 21, 1998, 112
Stat. 2681-913; Pub. L. 107-16, title V, Sec. 551(a), (b), June 7,
2001, 115 Stat. 86.)
Amendment of Section
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
Miscellaneous
AMENDMENTS
2001 - Subsec. (c)(2). Pub. L. 107-16, Sec. 551(b), 901,
temporarily inserted at end ''The values taken into account under
the preceding sentence shall be such values as of the date of the
contribution referred to in paragraph (8)(B).'' See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (c)(8)(A)(i). Pub. L. 107-16, Sec. 551(a), 901,
temporarily amended cl. (i) generally. Prior to amendment, cl. (i)
read as follows: ''which is located -
''(I) in or within 25 miles of an area which, on the date of
the decedent's death, is a metropolitan area (as defined by the
Office of Management and Budget),
''(II) in or within 25 miles of an area which, on the date of
the decedent's death, is a national park or wilderness area
designated as part of the National Wilderness Preservation System
(unless it is determined by the Secretary that land in or within
25 miles of such a park or wilderness area is not under
significant development pressure), or
''(III) in or within 10 miles of an area which, on the date of
the decedent's death, is an Urban National Forest (as designated
by the Forest Service),''.
See Effective and Termination Dates of 2001 Amendment note below.
1998 - Subsec. (c)(6). Pub. L. 105-206, Sec. 6007(g)(2),
substituted ''on or before the due date (including extensions) for
filing the return of tax imposed by section 2001 and shall be made
on such return.'' for ''on the return of the tax imposed by section
2001.''
Subsec. (c)(9). Pub. L. 105-206, Sec. 6007(g)(1), added par. (9).
Former par. (9) redesignated (10).
Subsec. (c)(10). Pub. L. 105-277, Sec. 4006(c)(3), substituted
''section 2057(e)(3)'' for ''section 2033A(e)(3)''.
Pub. L. 105-206, Sec. 6007(g)(1), redesignated par. (9) as (10).
1997 - Subsecs. (c), (d). Pub. L. 105-34 added subsec. (c) and
redesignated former subsec. (c) as (d).
1976 - Subsec. (c). Pub. L. 94-455 added subsec. (c).
1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which
excepted real property situated outside the United States.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title V, Sec. 551(c), June 7, 2001, 115 Stat. 86,
provided that: ''The amendments made by this section (amending this
section) shall apply to estates of decedents dying after December
31, 2000.''
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2010, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L.
107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to estates of decedents
dying after Dec. 31, 1997, see section 508(e)(1) of Pub. L. 105-34,
set out as a note under section 1014 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Section 18(b) of Pub. L. 87-834 provided that:
''(1) Except as provided in paragraph (2), the amendments made by
subsection (a) (amending this section and sections 2033, 2034,
2035, 2036, 2037, 2038, 2040, and 2041 of this title) shall apply
to the estates of decedents dying after the date of the enactment
of this Act (Oct. 16, 1962).
''(2) In the case of a decedent dying after the date of the
enactment of this Act (Oct. 16, 1962) and before July 1, 1964, the
value of real property situated outside of the United States shall
not be included in the gross estate (as defined in section 2031(a))
of the decedent -
''(A) under section 2033, 2034, 2035(a), 2036(a), 2037(a), or
2038(a) to the extent the real property, or the decedent's
interest in it, was acquired by the decedent before February 1,
1962;
''(B) under section 2040 to the extent such property or
interest was acquired by the decedent before February 1, 1962, or
was held by the decedent and the survivor in a joint tenancy or
tenancy by the entirety before February 1, 1962; or
''(C) under section 2041(a) to the extent that before February
1, 1962, such property or interest was subject to a general power
of appointment (as defined in section 2041) possessed by the
decedent.
In the case of real property, or an interest therein, situated
outside of the United States (including a general power of
appointment in respect of such property or interest, and including
property held by the decedent and the survivor in a joint tenancy
or tenancy by the entirety) which was acquired by the decedent
after January 31, 1962, by gift within the meaning of section 2511,
or from a prior decedent by devise or inheritance, or by reason of
death, form of ownership, or other conditions (including the
exercise or nonexercise of a power of appointment), for purposes of
this paragraph such property or interest therein shall be deemed to
have been acquired by the decedent before February 1, 1962, if
before that date the donor or prior decedent had acquired the
property or his interest therein or had possessed a power of
appointment in respect of the property or interest.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1014, 2103, 7520 of this
title; title 43 section 1620.
