Internal Revenue Code:Sec. 2612. Taxable termination; taxable distribution; direct skip

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle B - Estate and Gift Taxes
       CHAPTER 13 - TAX ON GENERATION-SKIPPING TRANSFERS
        Subchapter B - Generation-Skipping Transfers
      

Statute

    Sec. 2612. Taxable termination; taxable distribution; direct skip
 
    (a) Taxable termination
      (1) General rule
        For purposes of this chapter, the term ''taxable termination''
      means the termination (by death, lapse of time, release of power,
      or otherwise) of an interest in property held in a trust unless -
          (A) immediately after such termination, a non-skip person has
        an interest in such property, or
          (B) at no time after such termination may a distribution
        (including distributions on termination) be made from such
        trust to a skip person.
      (2) Certain partial terminations treated as taxable
        If, upon the termination of an interest in property held in
      trust by reason of the death of a lineal descendant of the
      transferor, a specified portion of the trust's assets are
      distributed to 1 or more skip persons (or 1 or more trusts for
      the exclusive benefit of such persons), such termination shall
      constitute a taxable termination with respect to such portion of
      the trust property.
    (b) Taxable distribution
      For purposes of this chapter, the term ''taxable distribution''
    means any distribution from a trust to a skip person (other than a
    taxable termination or a direct skip).
    (c) Direct skip
      For purposes of this chapter -
      (1) In general
        The term ''direct skip'' means a transfer subject to a tax
      imposed by chapter 11 or 12 of an interest in property to a skip
      person.
      (2) Look-thru rules not to apply
        Solely for purposes of determining whether any transfer to a
      trust is a direct skip, the rules of section 2651(f)(2) shall not
      apply.
 

Sources

    (Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90
    Stat. 1883; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct.
    22, 1986, 100 Stat. 2719; Pub. L. 100-647, title I, Sec.
    1014(g)(5)(B), (7), (15), Nov. 10, 1988, 102 Stat. 3564-3566; Pub.
    L. 105-34, title V, Sec. 511(b), Aug. 5, 1997, 111 Stat. 861.)
 

Miscellaneous

                                 AMENDMENTS
      1997 - Subsec. (c)(2). Pub. L. 105-34, Sec. 511(b)(2),
    substituted ''section 2651(f)(2)'' for ''section 2651(e)(2)''.
      Pub. L. 105-34, Sec. 511(b)(1), redesignated par. (3) as (2) and
    struck out heading and text of former par. (2). Text read as
    follows: ''For purposes of determining whether any transfer is a
    direct skip, if -
        ''(A) an individual is a grandchild of the transferor (or the
      transferor's spouse or former spouse), and
        ''(B) as of the time of the transfer, the parent of such
      individual who is a lineal descendant of the transferor (or the
      transferor's spouse or former spouse) is dead,
    such individual shall be treated as if such individual were a child
    of the transferor and all of that grandchild's children shall be
    treated as if they were grandchildren of the transferor.  In the
    case of lineal descendants below a grandchild, the preceding
    sentence may be reapplied.  If any transfer of property to a trust
    would be a direct skip but for this paragraph, any generation
    assignment under this paragraph shall apply also for purposes of
    applying this chapter to transfers from the portion of the trust
    attributable to such property.''
      Subsec. (c)(3). Pub. L. 105-34, Sec. 511(b)(1), redesignated par.
    (3) as (2).
      1988 - Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(15), amended
    par. (2) generally.  Prior to amendment, par. (2) read as follows:
    ''If, upon the termination of an interest in property held in a
    trust, a specified portion of the trust assets are distributed to
    skip persons who are lineal descendants of the holder of such
    interest (or to 1 or more trusts for the exclusive benefit of such
    persons), such termination shall constitute a taxable termination
    with respect to such portion of the trust property.''
      Subsec. (c)(2). Pub. L. 100-647, Sec. 1014(g)(7), in closing
    provisions, inserted at end ''If any transfer of property to a
    trust would be a direct skip but for this paragraph, any generation
    assignment under this paragraph shall apply also for purposes of
    applying this chapter to transfers from the portion of the trust
    attributable to such property.''
      Subsec. (c)(3). Pub. L. 100-647, Sec. 1014(g)(5)(B), added par.
    (3).
      1986 - Pub. L. 99-514 amended section generally, substituting
    provisions covering definition and application of ''taxable
    termination'', ''taxable distribution'', and ''direct skip'' for
    former provisions which indicated who the ''deemed transferor''
    would be for purposes of this chapter and that, for purposes of
    determining the person deemed the transferor, a parent related to
    the grantor of a trust by blood or adoption was to be deemed more
    closely related than a parent related to a grantor by marriage.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 511(c) of Pub. L. 105-34 provided that: ''The amendments
    made by this section (amending this section and section 2651 of
    this title) shall apply to terminations, distributions, and
    transfers occurring after December 31, 1997.''
                      EFFECTIVE DATE OF 1988 AMENDMENT
      Amendment by 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
      Section applicable to generation-skipping transfers (within the
    meaning of section 2611 of this title) made after Oct. 22, 1986,
    except as otherwise provided, see section 1433 of Pub. L. 99-514,
    set out as a note under section 2601 of this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in section 6166 of this title.