
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-16 Section 532(c)(6)]
[CITE: 26USC2056A]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                    Subtitle B--Estate and Gift Taxes
 
                         CHAPTER 11--ESTATE TAX
 
             Subchapter A--Estates of Citizens or Residents
 
                         PART IV--TAXABLE ESTATE
 
Sec. 2056A. Qualified domestic trust


(a) Qualified domestic trust defined

    For purposes of this section and section 2056(d), the term 
``qualified domestic trust'' means, with respect to any decedent, any 
trust if--
        (1) the trust instrument--
            (A) except as provided in regulations prescribed by the 
        Secretary, requires that at least 1 trustee of the trust be an 
        individual citizen of the United States or a domestic 
        corporation, and
            (B) provides that no distribution (other than a distribution 
        of income) may be made from the trust unless a trustee who is an 
        individual citizen of the United States or a domestic 
        corporation has the right to withhold from such distribution the 
        tax imposed by this section on such distribution,

        (2) such trust meets such requirements as the Secretary may by 
    regulations prescribe to ensure the collection of any tax imposed by 
    subsection (b), and
        (3) an election under this section by the executor of the 
    decedent applies to such trust.

(b) Tax treatment of trust

                    (1) Imposition of estate tax

        There is hereby imposed an estate tax on--
            (A) any distribution before the date of the death of the 
        surviving spouse from a qualified domestic trust, and
            (B) the value of the property remaining in a qualified 
        domestic trust on the date of the death of the surviving spouse.

                          (2) Amount of tax

        (A) In general

            In the case of any taxable event, the amount of the estate 
        tax imposed by paragraph (1) shall be the amount equal to--
                (i) the tax which would have been imposed under section 
            2001 on the estate of the decedent if the taxable estate of 
            the decedent had been increased by the sum of--
                    (I) the amount involved in such taxable event, plus
                    (II) the aggregate amount involved in previous 
                taxable events with respect to qualified domestic trusts 
                of such decedent, reduced by

                (ii) the tax which would have been imposed under section 
            2001 on the estate of the decedent if the taxable estate of 
            the decedent had been increased by the amount referred to in 
            clause (i)(II).

        (B) Tentative tax where tax of decedent not finally determined

            (i) In general

                If the tax imposed on the estate of the decedent under 
            section 2001 is not finally determined before the taxable 
            event, the amount of the tax imposed by paragraph (1) on 
            such event shall be determined by using the highest rate of 
            tax in effect under section 2001 as of the date of the 
            decedent's death.
            (ii) Refund of excess when tax finally determined

                If--
                    (I) the amount of the tax determined under clause 
                (i), exceeds
                    (II) the tax determined under subparagraph (A) on 
                the basis of the final determination of the tax imposed 
                by section 2001 on the estate of the decedent,

          such excess shall be allowed as a credit or refund (with 
            interest) if claim therefor is filed not later than 1 year 
            after the date of such final determination.

        (C) Special rule where decedent has more than 1 qualified 
                domestic trust

            If there is more than 1 qualified domestic trust with 
        respect to any decedent, the amount of the tax imposed by 
        paragraph (1) with respect to such trusts shall be determined by 
        using the highest rate of tax in effect under section 2001 as of 
        the date of the decedent's death (and the provisions of 
        paragraph (3)(B) shall not apply) unless, pursuant to a 
        designation made by the decedent's executor, there is 1 person--
                (i) who is an individual citizen of the United States or 
            a domestic corporation and is responsible for filing all 
            returns of tax imposed under paragraph (1) with respect to 
            such trusts and for paying all tax so imposed, and
                (ii) who meets such requirements as the Secretary may by 
            regulations prescribe.

         (3) Certain lifetime distributions exempt from tax

        (A) Income distributions

            No tax shall be imposed by paragraph (1)(A) on any 
        distribution of income to the surviving spouse.

        (B) Hardship exemption

            No tax shall be imposed by paragraph (1)(A) on any 
        distribution to the surviving spouse on account of hardship.

                (4) Tax where trust ceases to qualify

        If any qualified domestic trust ceases to meet the requirements 
    of paragraphs (1) and (2) of subsection (a), the tax imposed by 
    paragraph (1) shall apply as if the surviving spouse died on the 
    date of such cessation.

                            (5) Due date

        (A) Tax on distributions

            The estate tax imposed by paragraph (1)(A) shall be due and 
        payable on the 15th day of the 4th month following the calendar 
        year in which the taxable event occurs; except that the estate 
        tax imposed by paragraph (1)(A) on distributions during the 
        calendar year in which the surviving spouse dies shall be due 
        and payable not later than the date on which the estate tax 
        imposed by paragraph (1)(B) is due and payable.

        (B) Tax at death of spouse

            The estate tax imposed by paragraph (1)(B) shall be due and 
        payable on the date 9 months after the date of such death.

                        (6) Liability for tax

        Each trustee shall be personally liable for the amount of the 
    tax imposed by paragraph (1). Rules similar to the rules of section 
    2204 shall apply for purposes of the preceding sentence.

                        (7) Treatment of tax

        For purposes of section 2056(d), any tax paid under paragraph 
    (1) shall be treated as a tax paid under section 2001 with respect 
    to the estate of the decedent.

                          (8) Lien for tax

        For purposes of section 6324, any tax imposed by paragraph (1) 
    shall be treated as an estate tax imposed under this chapter with 
    respect to a decedent dying on the date of the taxable event (and 
    the property involved shall be treated as the gross estate of such 
    decedent).

                          (9) Taxable event

        The term ``taxable event'' means the event resulting in tax 
    being imposed under paragraph (1).

                    (10) Certain benefits allowed

        (A) In general

            If any property remaining in the qualified domestic trust on 
        the date of the death of the surviving spouse is includible in 
        the gross estate of such spouse for purposes of this chapter (or 
        would be includible if such spouse were a citizen or resident of 
        the United States), any benefit which is allowable (or would be 
        allowable if such spouse were a citizen or resident of the 
        United States) with respect to such property to the estate of 
        such spouse under section 2011, 2014, 2032, 2032A, 2055, 2056, 
        or 6166 shall be allowed for purposes of the tax imposed by 
        paragraph (1)(B).

        (B) Section 303

            If the estate of the surviving spouse meets the requirements 
        of section 303 with respect to any property described in 
        subparagraph (A), for purposes of section 303, the tax imposed 
        by paragraph (1)(B) with respect to such property shall be 
        treated as a Federal estate tax payable with respect to the 
        estate of the surviving spouse.

        (C) Section 6161(a)(2)

            The provisions of section 6161(a)(2) shall apply with 
        respect to the tax imposed by paragraph (1)(B), and the 
        reference in such section to the executor shall be treated as a 
        reference to the trustees of the trust.

     (11) Special rule where distribution tax paid out of trust

        For purposes of this subsection, if any portion of the tax 
    imposed by paragraph (1)(A) with respect to any distribution is paid 
    out of the trust, an amount equal to the portion so paid shall be 
    treated as a distribution described in paragraph (1)(A).

           (12) Special rule where spouse becomes citizen

        If the surviving spouse of the decedent becomes a citizen of the 
    United States and if--
            (A) such spouse was a resident of the United States at all 
        times after the date of the death of the decedent and before 
        such spouse becomes a citizen of the United States,
            (B) no tax was imposed by paragraph (1)(A) with respect to 
        any distribution before such spouse becomes such a citizen, or
            (C) such spouse elects--
                (i) to treat any distribution on which tax was imposed 
            by paragraph (1)(A) as a taxable gift made by such spouse 
            for purposes of--
                    (I) section 2001, and
                    (II) determining the amount of the tax imposed by 
                section 2501 on actual taxable gifts made by such spouse 
                during the year in which the spouse becomes a citizen or 
                any subsequent year, and

                (ii) to treat any reduction in the tax imposed by 
            paragraph (1)(A) by reason of the credit allowable under 
            section 2010 with respect to the decedent as a credit 
            allowable to such surviving spouse under section 2505 for 
            purposes of determining the amount of the credit allowable 
            under section 2505 with respect to taxable gifts made by the 
            surviving spouse during the year in which the spouse becomes 
            a citizen or any subsequent year,

        paragraph (1)(A) shall not apply to any distributions after such 
        spouse becomes such a citizen (and paragraph (1)(B) shall not 
        apply).

                 (13) Coordination with section 1015

        For purposes of section 1015, any distribution on which tax is 
    imposed by paragraph (1)(A) shall be treated as a transfer by gift, 
    and any tax paid under paragraph (1)(A) shall be treated as a gift 
    tax.

          (14) Coordination with terminable interest rules

        Any interest in a qualified domestic trust shall not be treated 
    as failing to meet the requirements of paragraph (5) or (7) of 
    section 2056(b) merely by reason of any provision of the trust 
    instrument permitting the withholding from any distribution of an 
    amount to pay the tax imposed by paragraph (1) on such distribution.

                (15) No tax on certain distributions

        No tax shall be imposed by paragraph (1) on any distribution to 
    the surviving spouse to the extent such distribution is to reimburse 
    such surviving spouse for any tax imposed by subtitle A on any item 
    of income of the trust to which such surviving spouse is not 
    entitled under the terms of the trust.

(c) Definitions

    For purposes of this section--

               (1) Property includes interest therein

        The term ``property'' includes an interest in property.

                             (2) Income

        Except as provided in regulations, the term ``income'' has the 
    meaning given to such term by section 643(b).

                              (3) Trust

        To the extent provided in regulations prescribed by the 
    Secretary, the term ``trust'' includes other arrangements which have 
    substantially the same effect as a trust.

(d) Election

    An election under this section with respect to any trust shall be 
made by the executor on the return of the tax imposed by section 2001. 
Such an election, once made, shall be irrevocable. No election may be 
made under this section on any return if such return is filed more than 
one year after the time prescribed by law (including extensions) for 
filing such return.

(e) Regulations

    The Secretary shall prescribe such regulations as may be necessary 
or appropriate to carry out the purposes of this section, including 
regulations under which there may be treated as a qualified domestic 
trust any annuity or other payment which is includible in the decedent's 
gross estate and is by its terms payable for life or a term of years.

(Added Pub. L. 100-647, title V, Sec. 5033(a)(2), Nov. 10, 1988, 102 
Stat. 3670; amended Pub. L. 101-239, title VII, Sec. 7815(d)(7), (9)-
(13), (15), Dec. 19, 1989, 103 Stat. 2415-2418; Pub. L. 101-508, title 
XI, Secs. 11702(g)(2)(A), (B), (3)(A), (4), 11704(a)(15), Nov. 5, 1990, 
104 Stat. 1388-515, 1388-516, 1388-518; Pub. L. 105-34, title XIII, 
Secs. 1312(a), 1314(a), Aug. 5, 1997, 111 Stat. 1044, 1045.)


                               Amendments

    1997--Subsec. (a)(1)(A). Pub. L. 105-34, Sec. 1314(a), inserted 
``except as provided in regulations prescribed by the Secretary,'' 
before ``requires''.
    Subsec. (c)(3). Pub. L. 105-34, Sec. 1312(a), added par. (3).
    1990--Subsec. (a)(1). Pub. L. 101-508, Sec. 11702(g)(2)(A), amended 
par. (1) generally. Prior to amendment, par. (1) read as follows: ``the 
trust instrument requires that at least 1 trustee of the trust be an 
individual citizen of the United States or a domestic corporation and 
that no distribution from the trust may be made without the approval of 
such a trustee,''.
    Subsec. (b)(2)(B)(ii). Pub. L. 101-508, Sec. 11704(a)(15), 
substituted ``therefor'' for ``therefore'' in concluding provisions.
    Subsec. (b)(10)(A). Pub. L. 101-508, Sec. 11702(g)(4), substituted 
``section 2011, 2014, 2032'' for ``section 2032''.
    Subsec. (b)(14), (15). Pub. L. 101-508, Sec. 11702(g)(2)(B), added 
pars. (14) and (15).
    Subsec. (d). Pub. L. 101-508, Sec. 11702(g)(3)(A), inserted at end 
``No election may be made under this section on any return if such 
return is filed more than one year after the time prescribed by law 
(including extensions) for filing such return.''
    1989--Subsec. (a)(1). Pub. L. 101-239, Sec. 7815(d)(7)(A)(i), 
amended par. (1) generally. Prior to amendment, par. (1) read as 
follows: ``the trust instrument requires that all trustees of the trust 
be individual citizens of the United States or domestic corporations,''.
    Subsec. (a)(2) to (4). Pub. L. 101-239, Sec. 7815(d)(7)(A)(ii), 
redesignated pars. (3) and (4) as (2) and (3), respectively, and struck 
out former par. (2) which read as follows: ``the surviving spouse of the 
decedent is entitled to all the income from the property in such trust, 
payable annually or at more frequent intervals,''.
    Subsec. (b)(1)(A). Pub. L. 101-239, Sec. 7815(d)(7)(C), struck out 
``other than a distribution of income required under subsection (a)(2)'' 
after ``qualified domestic trust''.
    Subsec. (b)(2)(B)(ii). Pub. L. 101-239, Sec. 7815(d)(11), inserted 
``(with interest)'' after ``credit or refund''.
    Subsec. (b)(2)(C). Pub. L. 101-239, Sec. 7815(d)(12), added subpar. 
(C).
    Subsec. (b)(3). Pub. L. 101-239, Sec. 7815(d)(7)(B), added par. (3). 
Former par. (3) redesignated (4).
    Subsec. (b)(4). Pub. L. 101-239, Sec. 7815(d)(7)(D), amended par. 
(4) generally. Prior to amendment, par. (4) read as follows: ``If any 
person other than an individual citizen of the United States or a 
domestic corporation becomes a trustee of a qualified domestic trust (or 
such trust ceases to meet the requirements of subsection (a)(3)), the 
tax imposed by paragraph (1) shall apply as if the surviving spouse died 
on the date on which such person became such a trustee or the date of 
such cessation, as the case may be.''
    Pub. L. 101-239, Sec. 7815(d)(7)(B), redesignated par. (3) as (4). 
Former par. (4) redesignated (5).
    Subsec. (b)(5). Pub. L. 101-239, Sec. 7815(d)(15), amended par. (5) 
generally. Prior to amendment, par. (5) read as follows: ``The estate 
tax imposed by paragraph (1) shall be due and payable on the 15th day of 
the 4th month following the calendar year in which the taxable event 
occurs.''
    Pub. L. 101-239, Sec. 7815(d)(7)(B), redesignated par. (4) as (5). 
Former par. (5) redesignated (6).
    Subsec. (b)(6) to (9). Pub. L. 101-239, Sec. 7815(d)(7)(B), 
redesignated pars. (5) to (8) as (6) to (9), respectively.
    Subsec. (b)(10) to (13). Pub. L. 101-239, Sec. 7815(d)(9), added 
pars. (10) to (13).
    Subsec. (c)(2). Pub. L. 101-239, Sec. 7815(d)(10), substituted 
``Except as provided in regulations, the term'' for ``The term''.
    Subsec. (e). Pub. L. 101-239, Sec. 7815(d)(13), added subsec. (e).


                    Effective Date of 1997 Amendment

    Section 1312(b) of Pub. L. 105-34 provided that: ``The amendment 
made by this section [amending this section] shall apply to estates of 
decedents dying after the date of the enactment of this Act [Aug. 5, 
1997].''
    Section 1314(b) of Pub. L. 105-34 provided that: ``The amendment 
made by this section [amending this section] shall apply to estates of 
decedents dying after the date of the enactment of this Act [Aug. 5, 
1997].''


                    Effective Date of 1990 Amendment

    Amendment by section 11702(g)(2), (4) of 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.
    Section 11702(g)(3)(B) of Pub. L. 101-508 provided that: ``The 
amendment made by subparagraph (A) [amending this section] shall not 
apply to any election made before the date 6 months after the date of 
the enactment of this Act [Nov. 5, 1990].''


                    Effective Date of 1989 Amendment

    Amendment by 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

    Section applicable to estates of decedents dying after Nov. 10, 
1988, see section 5033(d)(1) of Pub. L. 100-647, set out as an Effective 
Date of 1988 Amendment note under section 2056 of this title.


                            Transitional Rule

    Section 1303 of Pub. L. 105-34 provided that:
    ``(a) General Rule.--In the case of any trust created under an 
instrument executed before the date of the enactment of the Revenue 
Reconciliation Act of 1990 [Nov. 5, 1990], such trust shall be treated 
as meeting the requirements of paragraph (1) of section 2056A(a) of the 
Internal Revenue Code of 1986 if the trust instrument requires that all 
trustees of the trust be individual citizens of the United States or 
domestic corporations.
    ``(b) Effective Date.--The provisions of subsection (a) shall take 
effect as if included in the provisions of section 11702(g) of the 
Revenue Reconciliation Act of 1990 [Pub. L. 101-508].''


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, this 
section shall not apply to the extent such section 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.

                  Section Referred to in Other Sections

    This section is referred to in section 2056 of this title.
