26 USC 2702 - Special valuation rules in case of transfers of interests in trusts

U.S Code last checked for updates: May 03, 2024

§ 2702.

Special valuation rules in case of transfers of interests in trusts

(a)

Valuation rules

(1)

In general

(2)

Valuation of retained interests

(A)

In general

(B)

Valuation of qualified interest

(3)

Exceptions

(A)

In general

This subsection shall not apply to any transfer—

(i)

if such transfer is an incomplete gift,

(ii)

if such transfer involves the transfer of an interest in trust all the property in which consists of a residence to be used as a personal residence by persons holding term interests in such trust, or

(iii)

to the extent that regulations provide that such transfer is not inconsistent with the purposes of this section.

(B)

Incomplete gift

(b)

Qualified interest

For purposes of this section, the term “qualified interest” means—

(1)

any interest which consists of the right to receive fixed amounts payable not less frequently than annually,

(2)

any interest which consists of the right to receive amounts which are payable not less frequently than annually and are a fixed percentage of the fair market value of the property in the trust (determined annually), and

(3)

any noncontingent remainder interest if all of the other interests in the trust consist of interests described in paragraph (1) or (2).

(c)

Certain property treated as held in trust

For purposes of this section—

(1)

In general

(2)

Joint purchases

(3)

Term interest

The term “term interest” means—

(A)

a life interest in property, or

(B)

an interest in property for a term of years.

(4)

Valuation rule for certain term interests

If the nonexercise of rights under a term interest in tangible property would not have a substantial effect on the valuation of the remainder interest in such property—

(A)

subparagraph (A) of subsection (a)(2) shall not apply to such term interest, and

(B)

the value of such term interest for purposes of applying subsection (a)(1) shall be the amount which the holder of the term interest establishes as the amount for which such interest could be sold to an unrelated third party.

(d)

Treatment of transfers of interests in portion of trust

(e)

Member of the family

(Added Pub. L. 101–508, title XI, § 11602(a), Nov. 5, 1990, 104 Stat. 1388–497; amended Pub. L. 104–188, title I, § 1702(f)(11), Aug. 20, 1996, 110 Stat. 1872.)

cite as: 26 USC 2702