
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC2501]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                    Subtitle B--Estate and Gift Taxes
 
                          CHAPTER 12--GIFT TAX
 
              Subchapter A--Determination of Tax Liability
 
Sec. 2501. Imposition of tax


(a) Taxable transfers

                          (1) General rule

        A tax, computed as provided in section 2502, is hereby imposed 
    for each calendar year on the transfer of property by gift during 
    such calendar year by any individual resident or nonresident.

                (2) Transfers of intangible property

        Except as provided in paragraph (3), paragraph (1) shall not 
    apply to the transfer of intangible property by a nonresident not a 
    citizen of the United States.

                            (3) Exception

        (A) Certain individuals

            Paragraph (2) shall not apply in the case of a donor who, 
        within the 10-year period ending with the date of transfer, lost 
        United States citizenship, unless such loss did not have for one 
        of its principal purposes the avoidance of taxes under this 
        subtitle or subtitle A.

        (B) Certain individuals treated as having tax avoidance purpose

            For purposes of subparagraph (A), an individual shall be 
        treated as having a principal purpose to avoid such taxes if 
        such individual is so treated under section 877(a)(2).

        (C) Exception for certain individuals

            Subparagraph (B) shall not apply to a donor meeting the 
        requirements of section 877(c)(1).

        (D) Credit for foreign gift taxes

            The tax imposed by this section solely by reason of this 
        paragraph shall be credited with the amount of any gift tax 
        actually paid to any foreign country in respect of any gift 
        which is taxable under this section solely by reason of this 
        paragraph.

        (E) Cross reference

            For comparable treatment of long-term lawful permanent 
        residents who ceased to be taxed as residents, see section 
        877(e).

                         (4) Burden of proof

        If the Secretary establishes that it is reasonable to believe 
    that an individual's loss of United States citizenship would, but 
    for paragraph (3), result in a substantial reduction for the 
    calendar year in the taxes on the transfer of property by gift, the 
    burden of proving that such loss of citizenship did not have for one 
    of its principal purposes the avoidance of taxes under this subtitle 
    or subtitle A shall be on such individual.

              (5) Transfers to political organizations

        Paragraph (1) shall not apply to the transfer of money or other 
    property to a political organization (within the meaning of section 
    527(e)(1)) for the use of such organization.

(b) Certain residents of possessions considered citizens of the United 
        States

    A donor who is a citizen of the United States and a resident of a 
possession thereof shall, for purposes of the tax imposed by this 
chapter, be considered a ``citizen'' of the United States within the 
meaning of that term wherever used in this title unless he acquired his 
United States citizenship solely by reason of (1) his being a citizen of 
such possession of the United States, or (2) his birth or residence 
within such possession of the United States.

(c) Certain residents of possessions considered nonresidents not 
        citizens of the United States

    A donor who is a citizen of the United States and a resident of a 
possession thereof shall, for purposes of the tax imposed by this 
chapter, be considered a ``nonresident not a citizen of the United 
States'' within the meaning of that term wherever used in this title, 
but only if such donor acquired his United States citizenship solely by 
reason of (1) his being a citizen of such possession of the United 
States, or (2) his birth or residence within such possession of the 
United States.

(d) Cross references

            (1) For increase in basis of property acquired by gift for 
        gift tax paid, see section 1015(d).
            (2) For exclusion of transfers of property outside the 
        United States by a nonresident who is not a citizen of the 
        United States, see section 2511(a).

(Aug. 16, 1954, ch. 736, 68A Stat. 403; Pub. L. 85-866, title I, 
Secs. 43(b), 102(b), Sept. 2, 1958, 72 Stat. 1641, 1674; Pub. L. 86-779, 
Sec. 4(d), Sept. 14, 1960, 74 Stat. 1000; Pub. L. 89-809, title I, 
Sec. 109(a), Nov. 13, 1966, 80 Stat. 1574; Pub. L. 91-614, title I, 
Sec. 102(a)(1), Dec. 31, 1970, 84 Stat. 1838; Pub. L. 93-625, 
Sec. 14(a), Jan. 3, 1975, 88 Stat. 2121; Pub. L. 94-455, title XIX, 
Secs. 1902(a)(10), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1805, 1834; 
Pub. L. 97-34, title IV, Sec. 442(a)(1), Aug. 13, 1981, 95 Stat. 320; 
Pub. L. 100-647, title III, Sec. 3031(a)(2), Nov. 10, 1988, 102 Stat. 
3635; Pub. L. 101-508, title XI, Sec. 11601(b)(2), Nov. 5, 1990, 104 
Stat. 1388-490; Pub. L. 104-191, title V, Sec. 511(e)(2), (f)(2)(B), 
Aug. 21, 1996, 110 Stat. 2098, 2100; Pub. L. 105-34, title XVI, 
Sec. 1602(g)(5), Aug. 5, 1997, 111 Stat. 1095.)


                               Amendments

    1997--Subsec. (a)(3)(C). Pub. L. 105-34 substituted ``donor'' for 
``decedent''.
    1996--Subsec. (a)(3). Pub. L. 104-191, Sec. 511(e)(2), substituted 
``Exception'' for ``Exceptions'' in heading and amended text generally. 
Prior to amendment, text read as follows: ``Paragraph (2) shall not 
apply in the case of a donor who at any time after March 8, 1965, and 
within the 10-year period ending with the date of transfer lost United 
States citizenship unless--
        ``(A) such donor's loss of United States citizenship resulted 
    from the application of section 301(b), 350, or 355 of the 
    Immigration and Nationality Act, as amended (8 U.S.C. 1401(b), 1482, 
    or 1487), or
        ``(B) such loss did not have for one of its principal purposes 
    the avoidance of taxes under this subtitle or subtitle A.''
    Subsec. (a)(3)(E). Pub. L. 104-191, Sec. 511(f)(2)(B), added subpar. 
(E).
    1990--Subsec. (d)(3). Pub. L. 101-508 struck out par. (3) which read 
as follows: ``For treatment of certain transfers related to estate tax 
valuation freezes as gifts to which this chapter applies, see section 
2036(c)(4).''
    1988--Subsec. (d)(3). Pub. L. 100-647 added par. (3).
    1981--Subsec. (a)(1), (4). Pub. L. 97-34 substituted ``calendar 
year'' for ``calendar quarter'' wherever appearing.
    1976--Subsec. (a)(1). Pub. L. 94-455 inserted ``for each calendar 
quarter'' after ``hereby imposed'' and struck out ``For the first 
calendar quarter of calendar year 1971 and each calendar quarter 
thereafter'' after ``General rule-''.
    Subsec. (a)(4). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or 
his delegate'' after ``Secretary''.
    1975--Subsec. (a)(5). Pub. L. 93-625 added par. (5).
    1970--Subsec. (a)(1). Pub. L. 91-614, Sec. 102(a)(1)(A), substituted 
``For the first calendar quarter of the calendar year 1971 and each 
calendar quarter thereafter'' for ``For the calendar year 1955 and each 
calendar year thereafter'' and ``during such calendar quarter'' for 
``during such calendar year''.
    Subsec. (a)(4). Pub. L. 91-614, Sec. 102(a)(1)(B), substituted 
``calendar quarter'' for ``calendar year''.
    1966--Subsec. (a). Pub. L. 89-809 redesignated existing provisions 
as par. (1), struck out ``, except transfers of intangible property by a 
nonresident not a citizen of the United States and who was not engaged 
in business in the United States during such calendar year'' after 
``resident or nonresident'', and added pars. (2) to (4).
    1960--Subsec. (a). Pub. L. 86-779, Sec. 4(d)(2), struck out ``who 
is'' before ``not a citizen''.
    Subsecs. (c), (d). Pub. L. 86-779, Sec. 4(d)(1), added subsec. (c) 
and redesignated former subsec. (c) as (d).
    1958--Subsec. (b). Pub. L. 85-866, Sec. 102(b), added subsec. (b) 
and redesignated former subsec. (b) as (c).
    Subsec. (c). Pub. L. 85-866, Sec. 102(b), redesignated former 
subsec. (b) as (c) and Pub. L. 85-866, Sec. 43(b), made the heading read 
in the plural, designated existing provisions as par. (2) and added par. 
(1).


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-34 effective as if included in the 
provisions of the Health Insurance Portability and Accountability Act of 
1996, Pub. L. 104-191, to which such amendment relates, see section 
1602(i) of Pub. L. 105-34, set out as a note under section 26 of this 
title.


                    Effective Date of 1996 Amendment

    Amendment by Pub. L. 104-191 applicable to individuals losing United 
States citizenship on or after Feb. 6, 1995, and to long-term residents 
of the United States with respect to whom an event described in section 
877(e)(1)(A) or (B) of this title occurs on or after Feb. 6, 1995, with 
special rule for certain individuals who performed an act of 
expatriation specified in section 1481(a)(1)-(4) of Title 8, Aliens and 
Nationality, before Feb. 6, 1995, see section 511(g) of Pub. L. 104-191, 
set out as a note under section 877 of this title.


                    Effective Date of 1990 Amendment

    Amendment by Pub. L. 101-508 applicable in the case of property 
transferred after Dec. 17, 1987, see section 11601(c) of Pub. L. 101-
508, set out as a note under section 2036 of this title.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 applicable in cases where transfer 
referred to in section 2036(c)(1)(B) of this title is on or after June 
21, 1988, see section 3031(h)(2) of Pub. L. 100-647, set out as a note 
under section 2036 of this title.


                    Effective Date of 1981 Amendment

    Section 442(e) of Pub. L. 97-34 provided that: ``The amendments made 
by this section [amending this section and sections 1015, 2502, 2503, 
2504, 2505, 2512, 2513, 2522, 6019, 6075, and 6212 of this title] shall 
apply with respect to gifts made after December 31, 1981.''


                    Effective Date of 1976 Amendment

    Section 1902(c)(2) of Pub. L. 94-455, as amended by Pub. L. 95-600, 
title VII, Sec. 703(j)(12), Nov. 6, 1978, 92 Stat. 2942, provided that: 
``The amendments made by paragraphs (10), (11), and (12)(D) and (E) of 
subsection (a) [amending this section and sections 2522 and 2523 of this 
title] shall apply with respect to gifts made after December 31, 1976.''


                    Effective Date of 1975 Amendment

    Section 14(b) of Pub. L. 93-625 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to transfers made 
after May 7, 1974.''


                    Effective Date of 1970 Amendment

    Section 102(e) of Pub. L. 91-614 provided that: ``The amendments 
made by this section [amending this section and sections 1015, 2012, 
2502, 2503, 2504, 2512, 2513, 2515, 2521, 2522, 2523, 6019, 6075, 6212, 
6214, 6324, 6501, and 6512 of this title and enacting provisions set out 
as a note under this section] shall apply with respect to gifts made 
after December 31, 1970.''


                    Effective Date of 1966 Amendment

    Section 109(c) of Pub. L. 89-809 provided that: ``The amendments 
made by this section [amending this section and section 2511 of this 
title] shall apply with respect to the calendar year 1967 and all 
calendar years thereafter.''


                    Effective Date of 1960 Amendment

    Section 4(e)(3) of Pub. L. 86-779 provided that: ``The amendments 
made by subsection (d) [amending this section] shall apply with respect 
to gifts made after the date of the enactment of this Act [Sept. 14, 
1960].''


                    Effective Date of 1958 Amendment

    Amendment by Pub. L. 85-866 applicable to gifts made after September 
2, 1958, see section 102(d) of Pub. L. 85-866, set out as a note under 
section 2011 of this title.


Election To Have Amendments by Title IV of the Economic Recovery Tax Act 
                            of 1981 Not Apply

    Pub. L. 97-448, title I, Sec. 104(d)(3), Jan. 12, 1983, 96 Stat. 
2383, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 
2095, provided that:
    ``(A) In the case of any decedent--
        ``(i) who dies before August 13, 1984, and
        ``(ii) who made a gift (before August 13, 1981, and during the 
    3-year period ending on the date of the decedent's death) on which 
    tax imposed by chapter 12 of the Internal Revenue Code of 1986 
    [formerly I.R.C. 1954] has been paid before April 16, 1982,
such decedent's executor may make an election to have subtitle B of such 
Code (relating to estate and gift taxes) applied with respect to such 
decedent without regard to any of the amendments made by title IV of the 
Economic Recovery Tax Act of 1981 [Pub. L. 97-34, title IV].
    ``(B) An election under subparagraph (A) shall be made at such time 
and in such manner as the Secretary of the Treasury or his delegate 
shall prescribe.
    ``(C) An election under subparagraph (A), once made, shall be 
irrevocable.''

                  Section Referred to in Other Sections

    This section is referred to in sections 305, 351, 877, 2056A, 2502, 
2505, 2511, 2523, 2661 of this title.
