Internal Revenue Code:Sec. 2503. Taxable gifts
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle B - Estate and Gift Taxes
CHAPTER 12 - GIFT TAX
Subchapter A - Determination of Tax Liability
Statute
Sec. 2503. Taxable gifts
(a) General definition
The term ''taxable gifts'' means the total amount of gifts made
during the calendar year, less the deductions provided in
subchapter C (section 2522 and following).
(b) Exclusions from gifts
(1) In general
In the case of gifts (other than gifts of future interests in
property) made to any person by the donor during the calendar
year, the first $10,000 of such gifts to such person shall not,
for purposes of subsection (a), be included in the total amount
of gifts made during such year. Where there has been a transfer
to any person of a present interest in property, the possibility
that such interest may be diminished by the exercise of a power
shall be disregarded in applying this subsection, if no part of
such interest will at any time pass to any other person.
(2) Inflation adjustment
In the case of gifts made in a calendar year after 1998, the
$10,000 amount contained in paragraph (1) shall be increased by
an amount equal to -
(A) $10,000, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for such calendar year by substituting ''calendar year
1997'' for ''calendar year 1992'' in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $1,000, such amount shall be rounded to the next
lowest multiple of $1,000.
(c) Transfer for the benefit of minor
No part of a gift to an individual who has not attained the age
of 21 years on the date of such transfer shall be considered a gift
of a future interest in property for purposes of subsection (b) if
the property and the income therefrom -
(1) may be expended by, or for the benefit of, the donee before
his attaining the age of 21 years, and
(2) will to the extent not so expended -
(A) pass to the donee on his attaining the age of 21 years,
and
(B) in the event the donee dies before attaining the age of
21 years, be payable to the estate of the donee or as he may
appoint under a general power of appointment as defined in
section 2514(c).
((d) Repealed. Pub. L. 97-34, title III, Sec. 311(h)(5), Aug. 13,
1981, 95 Stat. 282)
(e) Exclusion for certain transfers for educational expenses or
medical expenses
(1) In general
Any qualified transfer shall not be treated as a transfer of
property by gift for purposes of this chapter.
(2) Qualified transfer
For purposes of this subsection, the term ''qualified
transfer'' means any amount paid on behalf of an individual -
(A) as tuition to an educational organization described in
section 170(b)(1)(A)(ii) for the education or training of such
individual, or
(B) to any person who provides medical care (as defined in
section 213(d)) with respect to such individual as payment for
such medical care.
(f) Waiver of certain pension rights
If any individual waives, before the death of a participant, any
survivor benefit, or right to such benefit, under section
401(a)(11) or 417, such waiver shall not be treated as a transfer
of property by gift for purposes of this chapter.
(g) Treatment of certain loans of artworks
(1) In general
For purposes of this subtitle, any loan of a qualified work of
art shall not be treated as a transfer (and the value of such
qualified work of art shall be determined as if such loan had not
been made) if -
(A) such loan is to an organization described in section
501(c)(3) and exempt from tax under section 501(c) (other than
a private foundation), and
(B) the use of such work by such organization is related to
the purpose or function constituting the basis for its
exemption under section 501.
(2) Definitions
For purposes of this section -
(A) Qualified work of art
The term ''qualified work of art'' means any archaeological,
historic, or creative tangible personal property.
(B) Private foundation
The term ''private foundation'' has the meaning given such
term by section 509, except that such term shall not include
any private operating foundation (as defined in section
4942(j)(3)).
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 404; Pub. L. 91-614, title I,
Sec. 102(a)(3), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 95-600, title
VII, Sec. 702(j)(2), Nov. 6, 1978, 92 Stat. 2931; Pub. L. 97-34,
title III, Sec. 311(h)(5), title IV, Sec. 441(a), (b), 442(a)(3),
Aug. 13, 1981, 95 Stat. 282, 319, 320; Pub. L. 99-514, title XVIII,
Sec. 1898(h)(1)(B), Oct. 22, 1986, 100 Stat. 2957; Pub. L. 100-647,
title I, Sec. 1018(s)(2)(A), (u)(52), Nov. 10, 1988, 102 Stat.
3586, 3593; Pub. L. 101-239, title VII, Sec. 7811(m)(1), Dec. 19,
1989, 103 Stat. 2412; Pub. L. 105-34, title V, Sec. 501(c), Aug. 5,
1997, 111 Stat. 846.)
Amendment of Section
ADJUSTMENT OF ANNUAL EXCLUSION FOR GIFTS IN CALENDAR YEAR 2002
For adjustment of dollar amounts of gifts not includible in
total amount of taxable gifts under this section for calendar
year 2002, see section 3.19 of Revenue Procedure 2001-59, set out
as a note under section 1 of this title.
Miscellaneous
AMENDMENTS
1997 - Subsec. (b). Pub. L. 105-34 designated existing provisions
as par. (1), inserted par. heading, realigned margins, and added
par. (2).
1989 - Subsecs. (f), (g). Pub. L. 101-239 redesignated subsec.
(f), relating to treatment of certain loans of artworks, as (g).
1988 - Subsec. (e)(2)(B). Pub. L. 100-647, Sec. 1018(u)(52),
substituted ''section 213(d)'' for ''section 213(e)''.
Subsec. (f). Pub. L. 100-647, Sec. 1018(s)(2)(A), added subsec.
(f) relating to treatment of certain loans of artworks.
1986 - Subsec. (f). Pub. L. 99-514 added subsec. (f).
1981 - Subsec. (a). Pub. L. 97-34, Sec. 442(a)(3)(A), substituted
''the total amount of gifts made during the calendar year, less the
deductions provided in subchapter C (section 2522 and following)''
for '', in the case of gifts made after December 31, 1970, the
total amount of gifts made during calendar quarter, less the
deductions provided in subchapter C (sec. 2521 and following'' and
struck out provision that in the case of gifts made before Jan. 1,
1971, ''taxable gifts'' means the total amount of gifts made during
the calendar year, less the deductions provided in subchapter C.
Subsec. (b). Pub. L. 97-34, Sec. 442(a)(3)(B), substituted
provision that in the case of gifts, other than gifts of future
interests in property, made to any person by the donor during the
calendar year, the first $10,000 of such gifts to such person shall
not, for purposes of subsec. (a), be included in the total amount
of gifts made during such year for provision that in computing
taxable gifts for the calendar quarter, in the case of gifts, other
than gifts of future interests in property, made to any person by
the donor during the calendar year 1971 and subsequent calendar
years, $10,000 of such gifts to such person less the aggregate of
the amounts of such gifts to such person during all preceding
calendar quarters of the calendar year shall not, for purposes of
subsec. (a), be included in the total amount of gifts made during
such quarter.
Pub. L. 97-34, Sec. 441(a), substituted ''$10,000'' for
''$3,000''.
Subsec. (d). Pub. L. 97-34, Sec. 311(h)(5), repealed subsec. (d)
which related to individual retirement accounts, etc., for spouse.
Subsec. (e). Pub. L. 97-34, Sec. 441(b), added subsec. (e).
1978 - Subsec. (d). Pub. L. 95-600 added subsec. (d).
1970 - Subsec. (a). Pub. L. 91-614, Sec. 102(a)(3)(A), divided
definition of ''taxable gifts'' into gifts made after Dec. 31,
1970, where taxable gifts are based on the total amount of gifts
made during the calendar quarter, less the applicable deductions,
and gifts made before Jan. 1, 1971, where taxable gifts are based
on the total amount of gifts made during the calendar year, less
the applicable deductions.
Subsec. (b). Pub. L. 91-614, Sec. 102(a)(3)(B), substituted
provisions with regard to computing taxable gifts for the calendar
quarter, in the case of gifts made to any persons by the donor
during the calendar year 1971 and subsequent calendar years, $3,000
of such gifts to such person less the aggregate of the amounts of
such gifts to such person during all preceding calendar quarters of
the calendar year shall not be included in the total amount of
gifts made during such quarter for provisions requiring in the case
of gifts made to any person by the donor during the calendar year
1955 and subsequent calendar years, the first $3,000 of such gifts
to such person shall not be included in the total amount of gifts
made during such year.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to estates of decedents
dying, and gifts made, after Dec. 31, 1997, see section 501(f) of
Pub. L. 105-34, set out as a note under section 2001 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1018(s)(2)(B) of Pub. L. 100-647 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
apply to loans after July 31, 1969.''
Amendment by section 1018(u)(52) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 effective as if included in the
provision of the Retirement Equity Act of 1984, Pub. L. 98-397, to
which such amendment relates, except as otherwise provided, see
section 1898(j) of Pub. L. 99-514, set out as a note under section
401 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 311(h)(5) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1981, see section 311(i)(1)
of Pub. L. 97-34, set out as a note under section 219 of this
title.
Section 441(c) of Pub. L. 97-34, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendments made by this section (amending this section) shall apply
to transfers after December 31, 1981.
''(2) Transitional rule. - If -
''(A) an instrument executed before the date which is 30 days
after the date of the enactment of this Act (Aug. 13, 1981)
provides for a power of appointment which may be exercised during
any period after December 31, 1981,
''(B) such power of appointment is expressly defined in terms
of, or by reference to, the amount of the gift tax exclusion
under section 2503(b) of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) (or the corresponding provision of prior
law),
''(C) the instrument described in subparagraph (A) has not been
amended on or after the date which is 30 days after the date of
the enactment of this Act (Aug. 13, 1981), and
''(D) the State has not enacted a statute applicable to such
gift under which such power of appointment is to be construed as
being defined in terms of, or by reference to, the amount of the
exclusion under such section 2503(b) after its amendment by
subsection (a),
then the amendment made by subsection (a) shall not apply to such
gift.''
Amendment by section 442(a)(3) of Pub. L. 97-34 applicable with
respect to gifts made after Dec. 31, 1981, see section 442(e) of
Pub. L. 97-34, set out as a note under section 2501 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 702(j)(3)(B) of Pub. L. 95-600 provided that: ''The
amendment made by paragraph (2) (amending this section) shall apply
to transfers made after December 31, 1976.''
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91-614 applicable with respect to gifts made
after Dec. 31, 1970, see section 102(e) of Pub. L. 91-614, set out
as a note under section 2501 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to
any plan, such plan amendment shall not be required to be made
before the first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99-514, as amended, set out as a note under
section 401 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 529, 672, 1015, 2001,
2012, 2057, 2101, 2511, 2523, 2611, 2632, 2642, 2701, 6019, 6039F,
6501 of this title.
