26 U.S.
Code § 2035 - Adjustments for certain gifts made within 3 years of decedent’s death
(a) Inclusion of certain property in gross estate
If—
(1) the decedent made a transfer (by trust
or otherwise) of an interest in any property, or relinquished a power with
respect to any property, during the 3-year period ending on the date of the
decedent’s death, and
(2) the value of such property (or an
interest therein) would have been included in the decedent’s gross estate under
section 2036, 2037,
2038, or 2042
if such transferred interest or relinquished power had been retained by the
decedent on the date of his death,
the value
of the gross estate shall include the value of any property (or interest
therein) which would have been so included.
(b) Inclusion of gift tax on gifts made
during 3 years before decedent’s death
The amount
of the gross estate (determined without regard to this subsection) shall be
increased by the amount of any tax paid under chapter 12 by the decedent or his
estate on any gift made by the decedent or his spouse during the 3-year period
ending on the date of the decedent’s death.
(c) Other rules relating to transfers
within 3 years of death
(1) In general
For
purposes of—
(B) section 2032A
(relating to special valuation of certain farms, etc., real property), and
(C) subchapter C of chapter 64 (relating to
lien for taxes),
the value
of the gross estate shall include the value of all property to the extent of
any interest therein of which the decedent has at any time made a transfer, by
trust or otherwise, during the 3-year period ending on the date of the
decedent’s death.
(2) Coordination with section 6166
An estate
shall be treated as meeting the 35 percent of adjusted gross estate requirement
of section 6166 (a)(1) only if the estate meets such
requirement both with and without the application of subsection (a).
(3) Marital and small transfers
Paragraph
(1) shall not apply to any transfer (other than a transfer with respect to a
life insurance policy) made during a calendar year to any donee if the decedent
was not required by section 6019
(other than by reason of section 6019
(2)) to file any gift tax return for such year
with respect to transfers to such donee.
(d) Exception
Subsection
(a) and paragraph (1) of subsection (c) shall not apply to any bona fide sale
for an adequate and full consideration in money or money’s worth.
(e) Treatment of certain transfers from
revocable trusts
For
purposes of this section and section 2038,
any transfer from any portion of a trust during any period that such portion
was treated under section 676
as owned by the decedent by reason of a power in the grantor (determined
without regard to section 672
(e)) shall be treated as a transfer made
directly by the decedent.
