26 U.S.
Code § 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). [1]
(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).
