Internal Revenue Code:Sec. 2523. Gift to spouse
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Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle B - Estate and Gift Taxes
CHAPTER 12 - GIFT TAX
Subchapter C - Deductions
Statute
Sec. 2523. Gift to spouse
(a) Allowance of deduction
Where a donor transfers during the calendar year by gift an
interest in property to a donee who at the time of the gift is the
donor's spouse, there shall be allowed as a deduction in computing
taxable gifts for the calendar year an amount with respect to such
interest equal to its value.
(b) Life estate or other terminable interest
Where, on the lapse of time, on the occurrence of an event or
contingency, or on the failure of an event or contingency to occur,
such interest transferred to the spouse will terminate or fail, no
deduction shall be allowed with respect to such interest -
(1) if the donor retains in himself, or transfers or has
transferred (for less than an adequate and full consideration in
money or money's worth) to any person other than such donee
spouse (or the estate of such spouse), an interest in such
property, and if by reason of such retention or transfer the
donor (or his heirs or assigns) or such person (or his heirs or
assigns) may possess or enjoy any part of such property after
such termination or failure of the interest transferred to the
donee spouse; or
(2) if the donor immediately after the transfer to the donee
spouse has a power to appoint an interest in such property which
he can exercise (either alone or in conjunction with any person)
in such manner that the appointee may possess or enjoy any part
of such property after such termination or failure of the
interest transferred to the donee spouse. For purposes of this
paragraph, the donor shall be considered as having immediately
after the transfer to the donee spouse such power to appoint even
though such power cannot be exercised until after the lapse of
time, upon the occurrence of an event or contingency, or on the
failure of an event or contingency to occur.
An exercise or release at any time by the donor, either alone or in
conjunction with any person, of a power to appoint an interest in
property, even though not otherwise a transfer, shall, for purposes
of paragraph (1), be considered as a transfer by him. Except as
provided in subsection (e), where at the time of the transfer it is
impossible to ascertain the particular person or persons who may
receive from the donor an interest in property so transferred by
him, such interest shall, for purposes of paragraph (1), be
considered as transferred to a person other than the donee spouse.
(c) Interest in unidentified assets
Where the assets out of which, or the proceeds of which, the
interest transferred to the donee spouse may be satisfied include a
particular asset or assets with respect to which no deduction would
be allowed if such asset or assets were transferred from the donor
to such spouse, then the value of the interest transferred to such
spouse shall, for purposes of subsection (a), be reduced by the
aggregate value of such particular assets.
(d) Joint interests
If the interest is transferred to the donee spouse as sole joint
tenant with the donor or as tenant by the entirety, the interest of
the donor in the property which exists solely by reason of the
possibility that the donor may survive the donee spouse, or that
there may occur a severance of the tenancy, shall not be considered
for purposes of subsection (b) as an interest retained by the donor
in himself.
(e) Life estate with power of appointment in donee spouse
Where the donor transfers an interest in property, if by such
transfer his spouse is entitled for life to all of the income from
the entire interest, or all the income from a specific portion
thereof, payable annually or at more frequent intervals, with power
in the donee spouse to appoint the entire interest, or such
specific portion (exercisable in favor of such donee spouse, or of
the estate of such donee spouse, or in favor of either, whether or
not in each case the power is exercisable in favor of others), and
with no power in any other person to appoint any part of such
interest, or such portion, to any person other than the donee
spouse -
(1) the interest, or such portion, so transferred shall, for
purposes of subsection (a) be considered as transferred to the
donee spouse, and
(2) no part of the interest, or such portion, so transferred
shall, for purposes of subsection (b)(1), be considered as
retained in the donor or transferred to any person other than the
donee spouse.
This subsection shall apply only if, by such transfer, such power
in the donee spouse to appoint the interest, or such portion,
whether exercisable by will or during life, is exercisable by such
spouse alone and in all events. For purposes of this subsection,
the term ''specific portion'' only includes a portion determined on
a fractional or percentage basis.
(f) Election with respect to life estate for donee spouse
(1) In general
In the case of qualified terminable interest property -
(A) for purposes of subsection (a), such property shall be
treated as transferred to the donee spouse, and
(B) for purposes of subsection (b)(1), no part of such
property shall be considered as retained in the donor or
transferred to any person other than the donee spouse.
(2) Qualified terminable interest property
For purposes of this subsection, the term ''qualified
terminable interest property'' means any property -
(A) which is transferred by the donor spouse,
(B) in which the donee spouse has a qualifying income
interest for life, and
(C) to which an election under this subsection applies.
(3) Certain rules made applicable
For purposes of this subsection, rules similar to the rules of
clauses (ii), (iii), and (iv) of section 2056(b)(7)(B) shall
apply and the rules of section 2056(b)(10) shall apply.
(4) Election
(A) Time and manner
An election under this subsection with respect to any
property shall be made on or before the date prescribed by
section 6075(b) for filing a gift tax return with respect to
the transfer (determined without regard to section 6019(2)) and
shall be made in such manner as the Secretary shall by
regulations prescribe.
(B) Election irrevocable
An election under this subsection, once made, shall be
irrevocable.
(5) Treatment of interest retained by donor spouse
(A) In general
In the case of any qualified terminable interest property -
(i) such property shall not be includible in the gross
estate of the donor spouse, and
(ii) any subsequent transfer by the donor spouse of an
interest in such property shall not be treated as a transfer
for purposes of this chapter.
(B) Subparagraph (A) not to apply after transfer by donee
spouse
Subparagraph (A) shall not apply with respect to any property
after the donee spouse is treated as having transferred such
property under section 2519, or such property is includible in
the donee spouse's gross estate under section 2044.
(6) Treatment of joint and survivor annuities
In the case of a joint and survivor annuity where only the
donor spouse and donee spouse have the right to receive payments
before the death of the last spouse to die -
(A) the donee spouse's interest shall be treated as a
qualifying income interest for life,
(B) the donor spouse shall be treated as having made an
election under this subsection with respect to such annuity
unless the donor spouse otherwise elects on or before the date
specified in paragraph (4)(A),
(C) paragraph (5) and section 2519 shall not apply to the
donor spouse's interest in the annuity, and
(D) if the donee spouse dies before the donor spouse, no
amount shall be includible in the gross estate of the donee
spouse under section 2044 with respect to such annuity.
An election under subparagraph (B), once made, shall be
irrevocable.
(g) Special rule for charitable remainder trusts
(1) In general
If, after the transfer, the donee spouse is the only
noncharitable beneficiary (other than the donor) of a qualified
charitable remainder trust, subsection (b) shall not apply to the
interest in such trust which is transferred to the donee spouse.
(2) Definitions
For purposes of paragraph (1), the term ''noncharitable
beneficiary'' and ''qualified charitable remainder trust'' have
the meanings given to such terms by section 2056(b)(8)(B).
(FOOTNOTE 1)
(FOOTNOTE 1) See References in Text note below.
(h) Denial of double deduction
Nothing in this section or any other provision of this chapter
shall allow the value of any interest in property to be deducted
under this chapter more than once with respect to the same donor.
(i) Disallowance of marital deduction where spouse not citizen
If the spouse of the donor is not a citizen of the United States
-
(1) no deduction shall be allowed under this section,
(2) section 2503(b) shall be applied with respect to gifts
which are made by the donor to such spouse and with respect to
which a deduction would be allowable under this section but for
paragraph (1) by substituting ''$100,000'' for ''$10,000'', and
(3) the principles of sections 2515 and 2515A (as such sections
were in effect before their repeal by the Economic Recovery Tax
Act of 1981) shall apply, except that the provisions of such
section 2515 providing for an election shall not apply.
This subsection shall not apply to any transfer resulting from the
acquisition of rights under a joint and survivor annuity described
in subsection (f)(6).
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 412; Pub. L. 91-614, title I,
Sec. 102(c)(3), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94-455, title
XIX, Sec. 1902(a)(12)(E), title XX, Sec. 2002(b), Oct. 4, 1976, 90
Stat. 1806, 1854; Pub. L. 97-34, title IV, Sec. 403(b)(1), (2),
(d)(2), Aug. 13, 1981, 95 Stat. 301, 303; Pub. L. 97-448, title I,
Sec. 104(a)(2)(B), (4)-(6), Jan. 12, 1983, 96 Stat. 2380, 2381;
Pub. L. 99-514, title XVIII, Sec. 1879(n)(1), Oct. 22, 1986, 100
Stat. 2910; Pub. L. 100-647, title V, Sec. 5033(b), title VI, Sec.
6152(b), Nov. 10, 1988, 102 Stat. 3672, 3725; Pub. L. 101-239,
title VII, Sec. 7815(d)(1)(A), (2), Dec. 19, 1989, 103 Stat. 2415;
Pub. L. 101-508, title XI, Sec. 11702(g)(1), Nov. 5, 1990, 104
Stat. 1388-515; Pub. L. 102-486, title XIX, Sec. 1941(b), Oct. 24,
1992, 106 Stat. 3036; Pub. L. 105-34, title XVI, Sec. 1604(g)(4),
Aug. 5, 1997, 111 Stat. 1099.)
Amendment of Section
ADJUSTMENT OF ANNUAL EXCLUSION FOR GIFTS IN CALENDAR YEAR 2002 TO
SPOUSE WHO IS NOT UNITED STATES CITIZEN
For adjustment of dollar amounts of gifts not includible in
total amount of taxable gifts under subsec. (i)(2) of this
section for calendar year 2002, see section 3.19(2) of Revenue
Procedure 2001-59, set out as a note under section 1 of this
title.
References in Text
REFERENCES IN TEXT
Section 2056 of this title, referred to in subsec. (g)(2), was
subsequently amended, and section 2056(b)(8)(B) no longer defines
the term ''noncharitable beneficiary''.
Sections 2515 and 2515A, referred to in subsec. (i)(3), were
repealed by Pub. L. 97-34, title IV, Sec. 403(c)(3)(B), Aug. 13,
1981, 95 Stat. 302.
Miscellaneous
AMENDMENTS
1997 - Subsec. (g)(1). Pub. L. 105-34 substituted ''qualified
charitable remainder trust'' for ''qualified remainder trust''.
1992 - Subsec. (e). Pub. L. 102-486, Sec. 1941(b)(1), in closing
provisions, inserted at end ''For purposes of this subsection, the
term 'specific portion' only includes a portion determined on a
fractional or percentage basis.''
Subsec. (f)(3). Pub. L. 102-486, Sec. 1941(b)(2), inserted before
period at end ''and the rules of section 2056(b)(10) shall apply''.
1990 - Subsec. (i). Pub. L. 101-508 inserted at end ''This
subsection shall not apply to any transfer resulting from the
acquisition of rights under a joint and survivor annuity described
in subsection (f)(6).''
1989 - Subsec. (a). Pub. L. 101-239, Sec. 7815(d)(2), struck out
''who is a citizen or resident'' after ''Where a donor''.
Subsec. (i)(2). Pub. L. 101-239, Sec. 7815(d)(1)(A), substituted
''which are made by the donor to such spouse and with respect to
which a deduction would be allowable under this section but for
paragraph (1)'' for ''made by the donor to such spouse''.
1988 - Subsec. (f)(6). Pub. L. 100-647, Sec. 6152(b), added par.
(6).
Subsec. (i). Pub. L. 100-647, Sec. 5033(b), added subsec. (i).
1986 - Subsec. (f)(4)(A). Pub. L. 99-514 amended subpar. (A)
generally. Prior to amendment, subpar. (A) read as follows: ''An
election under this subsection with respect to any property shall
be made on or before the first April 15th after the calendar year
in which the interest was transferred and shall be made in such
manner as the Secretary shall by regulations prescribe.''
1983 - Subsec. (f)(3). Pub. L. 97-448, Sec. 104(a)(6),
substituted ''rules similar to the rules of clauses (ii)'' for
''the rules of clauses (ii)''.
Subsec. (f)(4). Pub. L. 97-448, Sec. 104(a)(4), divided existing
provisions into subpars. (A) and (B), in subpar. (A) as so
designated substituted ''shall be made on or before the first April
15th after the calendar year in which the interest was transferred
and shall be made in such manner as the Secretary shall by
regulations prescribe'' for ''shall be made on the return of the
tax imposed by section 2501 for the calendar year in which the
interest was transferred'', and in subpar. (B) as so designated
substituted ''An election under this subsection'' for ''Such an
election''.
Subsec. (f)(5). Pub. L. 97-448, Sec. 104(a)(5), added par. (5).
Subsec. (h). Pub. L. 97-448, Sec. 104(a)(2)(B), added subsec.
(h).
1981 - Subsec. (a). Pub. L. 97-34, Sec. 403(b)(1), struck out
''(1) In general'' designation for existing text and struck out
par. (2) which declared that the aggregate of the allowed
deductions for any calendar quarter should not exceed the sum of
$100,000 reduced, but not below zero, by the aggregate of the
allowed deductions for preceding calendar quarters beginning after
Dec. 31, 1976, plus 50 percent of the lesser of the amount of the
allowed deductions for such calendar quarter, determined without
regard to par. (2), or the amount, if any, by which the aggregate
determined under cl. (i) of par. (2) for the calendar quarter and
for each preceding calendar quarter beginning after Dec. 31, 1976,
exceeds $200,000.
Subsec. (f). Pub. L. 97-34, Sec. 403(b)(2), (d)(2), substituted
provision relating to election with respect to life estate for
donee spouse for provision relating to community property.
Subsec. (g). Pub. L. 97-34, Sec. 403(d)(2), added subsec. (g).
1976 - Subsec. (a). Pub. L. 94-455 designated existing provisions
as par. (1), struck out ''one-half of'' after ''interest equal
to'', and added par. (2) relating to limitations on aggregate
amount of deductions.
Subsec. (f)(1). Pub. L. 94-455, Sec. 1902(a)(12)(E), struck out
''Territory'' after ''any State''.
1970 - Subsec. (a). Pub. L. 91-614 substituted ''quarter'' for
''year'' in two places.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to gifts made after Oct.
24, 1992, see section 1941(c)(2) of Pub. L. 102-486, set out as a
note under section 2056 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 effective 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
11702(j) of Pub. L. 101-508, set out as a note under section 59 of
this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7815(d)(1)(B) of Pub. L. 101-239 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
apply with respect to gifts made after June 29, 1989.''
Amendment by section 7815(d)(2) of 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 5033(d)(2) of Pub. L. 100-647 provided that: ''The
amendments made by subsection (b) (amending this section) shall
apply to gifts on or after July 14, 1988.''
Amendment by section 6152(b) of Pub. L. 100-647 applicable to
transfers after Dec. 31, 1981, and, in the case of any estate or
gift tax return filed before Nov. 10, 1988, such amendment
inapplicable to the extent it would be inconsistent with the
treatment of the annuity on such return unless executor or donor
otherwise elects before the day 2 years after Nov. 10, 1988, the
time for making such an election not to expire before such date,
see section 6152(c), of Pub. L. 100-647, set out as a note under
section 2056 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1879(n)(2) of Pub. L. 99-514 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply
to transfers made after December 31, 1985.''
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to gifts made after Dec.
31, 1981, see section 403(e)(2) of Pub. L. 97-34, set out as a note
under section 2056 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 2002(d)(2) of Pub. L. 94-455 provided that: ''The
amendment made by subsection (b) (amending this section) shall
apply to gifts 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.
APPLICATION OF AMENDMENTS BY SECTION 5033 OF PUB. L. 100-647 TO
ESTATES OF, OR GIFTS BY, NONCITIZEN AND NONRESIDENT INDIVIDUALS
For provisions directing that in the case of the estate of, or
gift by, an individual who was not a citizen or resident of the
United States but was a resident of a foreign country with which
the United States has a tax treaty with respect to estate,
inheritance, or gift taxes, the amendments made by section 5033 of
Pub. L. 100-647 shall not apply to the extent such amendments would
be inconsistent with the provisions of such treaty relating to
estate, inheritance, or gift tax marital deductions, but that in
the case of the estate of an individual dying before the date 3
years after Dec. 19, 1989, or a gift by an individual before the
date 3 years after Dec. 19, 1989, the requirement of the preceding
provision that the individual not be a citizen or resident of the
United States shall not apply, see section 7815(d)(14) of Pub. L.
101-239, set out as a note under section 2056 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.
SPECIAL RULE FOR CERTAIN TRANSFERS IN OCTOBER 1984
Section 1879(n)(3) of Pub. L. 99-514 provided that: ''An election
under section 2523(f) of the Internal Revenue Code of 1954 (now
1986) with respect to an interest in property which -
''(A) was transferred during October 1984, and
''(B) was transferred pursuant to a trust instrument stating
that the grantor's intention was that the property of the trust
would constitute qualified terminable interest property as to
which a Federal gift tax marital deduction would be allowed upon
the grantor's election,
shall be made on the return of tax imposed by section 2501 of such
Code for the calendar year 1984 which is filed on or before the due
date of such return or, if a timely return is not filed, on the
first such return filed after the due date of such return and
before December 31, 1986.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1015, 2012, 2044, 2519,
2652, 2701, 6019 of this title.
