
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: 26USC2503]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                    Subtitle B--Estate and Gift Taxes
 
                          CHAPTER 12--GIFT TAX
 
              Subchapter A--Determination of Tax Liability
 
Sec. 2503. Taxable gifts


(a) General definition

    The term ``taxable gifts'' means the total amount of gifts made 
during the calendar year, less the deductions provided in subchapter C 
(section 2522 and following).

(b) Exclusions from gifts

                           (1) In general

        In the case of gifts (other than gifts of future interests in 
    property) made to any person by the donor during the calendar year, 
    the first $10,000 of such gifts to such person shall not, for 
    purposes of subsection (a), be included in the total amount of gifts 
    made during such year. Where there has been a transfer to any person 
    of a present interest in property, the possibility that such 
    interest may be diminished by the exercise of a power shall be 
    disregarded in applying this subsection, if no part of such interest 
    will at any time pass to any other person.

                      (2) Inflation adjustment

        In the case of gifts made in a calendar year after 1998, the 
    $10,000 amount contained in paragraph (1) shall be increased by an 
    amount equal to--
            (A) $10,000, multiplied by
            (B) the cost-of-living adjustment determined under section 
        1(f)(3) for such calendar year by substituting ``calendar year 
        1997'' for ``calendar year 1992'' in subparagraph (B) thereof.

    If any amount as adjusted under the preceding sentence is not a 
    multiple of $1,000, such amount shall be rounded to the next lowest 
    multiple of $1,000.

(c) Transfer for the benefit of minor

    No part of a gift to an individual who has not attained the age of 
21 years on the date of such transfer shall be considered a gift of a 
future interest in property for purposes of subsection (b) if the 
property and the income therefrom--
        (1) may be expended by, or for the benefit of, the donee before 
    his attaining the age of 21 years, and
        (2) will to the extent not so expended--
            (A) pass to the donee on his attaining the age of 21 years, 
        and
            (B) in the event the donee dies before attaining the age of 
        21 years, be payable to the estate of the donee or as he may 
        appoint under a general power of appointment as defined in 
        section 2514(c).

[(d) Repealed. Pub. L. 97-34, title III, Sec. 311(h)(5), Aug. 13, 1981, 
        95 Stat. 282]

(e) Exclusion for certain transfers for educational expenses or medical 
        expenses

                           (1) In general

        Any qualified transfer shall not be treated as a transfer of 
    property by gift for purposes of this chapter.

                       (2) Qualified transfer

        For purposes of this subsection, the term ``qualified transfer'' 
    means any amount paid on behalf of an individual--
            (A) as tuition to an educational organization described in 
        section 170(b)(1)(A)(ii) for the education or training of such 
        individual, or
            (B) to any person who provides medical care (as defined in 
        section 213(d)) with respect to such individual as payment for 
        such medical care.

(f) Waiver of certain pension rights

    If any individual waives, before the death of a participant, any 
survivor benefit, or right to such benefit, under section 401(a)(11) or 
417, such waiver shall not be treated as a transfer of property by gift 
for purposes of this chapter.

(g) Treatment of certain loans of artworks

                           (1) In general

        For purposes of this subtitle, any loan of a qualified work of 
    art shall not be treated as a transfer (and the value of such 
    qualified work of art shall be determined as if such loan had not 
    been made) if--
            (A) such loan is to an organization described in section 
        501(c)(3) and exempt from tax under section 501(c) (other than a 
        private foundation), and
            (B) the use of such work by such organization is related to 
        the purpose or function constituting the basis for its exemption 
        under section 501.

                           (2) Definitions

        For purposes of this section--

        (A) Qualified work of art

            The term ``qualified work of art'' means any archaeological, 
        historic, or creative tangible personal property.

        (B) Private foundation

            The term ``private foundation'' has the meaning given such 
        term by section 509, except that such term shall not include any 
        private operating foundation (as defined in section 4942(j)(3)).

(Aug. 16, 1954, ch. 736, 68A Stat. 404; Pub. L. 91-614, title I, 
Sec. 102(a)(3), Dec. 31, 1970, 84 Stat. 1839; Pub. L. 95-600, title VII, 
Sec. 702(j)(2), Nov. 6, 1978, 92 Stat. 2931; Pub. L. 97-34, title III, 
Sec. 311(h)(5), title IV, Secs. 441(a), (b), 442(a)(3), Aug. 13, 1981, 
95 Stat. 282, 319, 320; Pub. L. 99-514, title XVIII, Sec. 1898(h)(1)(B), 
Oct. 22, 1986, 100 Stat. 2957; Pub. L. 100-647, title I, 
Sec. 1018(s)(2)(A), (u)(52), Nov. 10, 1988, 102 Stat. 3586, 3593; Pub. 
L. 101-239, title VII, Sec. 7811(m)(1), Dec. 19, 1989, 103 Stat. 2412; 
Pub. L. 105-34, title V, Sec. 501(c), Aug. 5, 1997, 111 Stat. 846.)

     Adjustment of Annual Exclusion for Gifts in Calendar Year 2001

        For adjustment of dollar amounts of gifts not includible in 
    total amount of taxable gifts under this section for calendar year 
    2001, see section 3.17 of Revenue Procedure 2001-13, set out as a 
    note under section 1 of this title.


                               Amendments

    1997--Subsec. (b). Pub. L. 105-34 designated existing provisions as 
par. (1), inserted par. heading, realigned margins, and added par. (2).
    1989--Subsecs. (f), (g). Pub. L. 101-239 redesignated subsec. (f), 
relating to treatment of certain loans of artworks, as (g).
    1988--Subsec. (e)(2)(B). Pub. L. 100-647, Sec. 1018(u)(52), 
substituted ``section 213(d)'' for ``section 213(e)''.
    Subsec. (f). Pub. L. 100-647, Sec. 1018(s)(2)(A), added subsec. (f) 
relating to treatment of certain loans of artworks.
    1986--Subsec. (f). Pub. L. 99-514 added subsec. (f).
    1981--Subsec. (a). Pub. L. 97-34, Sec. 442(a)(3)(A), substituted 
``the total amount of gifts made during the calendar year, less the 
deductions provided in subchapter C (section 2522 and following)'' for 
``, in the case of gifts made after December 31, 1970, the total amount 
of gifts made during calendar quarter, less the deductions provided in 
subchapter C (sec. 2521 and following'' and struck out provision that in 
the case of gifts made before Jan. 1, 1971, ``taxable gifts'' means the 
total amount of gifts made during the calendar year, less the deductions 
provided in subchapter C.
    Subsec. (b). Pub. L. 97-34, Sec. 442(a)(3)(B), substituted provision 
that in the case of gifts, other than gifts of future interests in 
property, made to any person by the donor during the calendar year, the 
first $10,000 of such gifts to such person shall not, for purposes of 
subsec. (a), be included in the total amount of gifts made during such 
year for provision that in computing taxable gifts for the calendar 
quarter, in the case of gifts, other than gifts of future interests in 
property, made to any person by the donor during the calendar year 1971 
and subsequent calendar years, $10,000 of such gifts to such person less 
the aggregate of the amounts of such gifts to such person during all 
preceding calendar quarters of the calendar year shall not, for purposes 
of subsec. (a), be included in the total amount of gifts made during 
such quarter.
    Pub. L. 97-34, Sec. 441(a), substituted ``$10,000'' for ``$3,000''.
    Subsec. (d). Pub. L. 97-34, Sec. 311(h)(5), repealed subsec. (d) 
which related to individual retirement accounts, etc., for spouse.
    Subsec. (e). Pub. L. 97-34, Sec. 441(b), added subsec. (e).
    1978--Subsec. (d). Pub. L. 95-600 added subsec. (d).
    1970--Subsec. (a). Pub. L. 91-614, Sec. 102(a)(3)(A), divided 
definition of ``taxable gifts'' into gifts made after Dec. 31, 1970, 
where taxable gifts are based on the total amount of gifts made during 
the calendar quarter, less the applicable deductions, and gifts made 
before Jan. 1, 1971, where taxable gifts are based on the total amount 
of gifts made during the calendar year, less the applicable deductions.
    Subsec. (b). Pub. L. 91-614, Sec. 102(a)(3)(B), substituted 
provisions with regard to computing taxable gifts for the calendar 
quarter, in the case of gifts made to any persons by the donor during 
the calendar year 1971 and subsequent calendar years, $3,000 of such 
gifts to such person less the aggregate of the amounts of such gifts to 
such person during all preceding calendar quarters of the calendar year 
shall not be included in the total amount of gifts made during such 
quarter for provisions requiring in the case of gifts made to any person 
by the donor during the calendar year 1955 and subsequent calendar 
years, the first $3,000 of such gifts to such person shall not be 
included in the total amount of gifts made during such year.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-34 applicable to estates of decedents 
dying, and gifts made, after Dec. 31, 1997, see section 501(f) of Pub. 
L. 105-34, set out as a note under section 2001 of this title.


                    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 of 1988 Amendment

    Section 1018(s)(2)(B) of Pub. L. 100-647 provided that: ``The 
amendment made by subparagraph (A) [amending this section] shall apply 
to loans after July 31, 1969.''
    Amendment by section 1018(u)(52) of Pub. L. 100-647 effective, 
except as otherwise provided, as if included in the provision of the Tax 
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see 
section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of 
this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 effective as if included in the 
provision of the Retirement Equity Act of 1984, Pub. L. 98-397, to which 
such amendment relates, except as otherwise provided, see section 
1898(j) of Pub. L. 99-514, set out as a note under section 401 of this 
title.


                    Effective Date of 1981 Amendment

    Amendment by section 311(h)(5) of Pub. L. 97-34 applicable to 
taxable years beginning after Dec. 31, 1981, see section 311(i)(1) of 
Pub. L. 97-34, set out as a note under section 219 of this title.
    Section 441(c) of Pub. L. 97-34, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section [amending this section] shall apply to 
transfers after December 31, 1981.
    ``(2) Transitional rule.--If--
        ``(A) an instrument executed before the date which is 30 days 
    after the date of the enactment of this Act [Aug. 13, 1981] provides 
    for a power of appointment which may be exercised during any period 
    after December 31, 1981,
        ``(B) such power of appointment is expressly defined in terms 
    of, or by reference to, the amount of the gift tax exclusion under 
    section 2503(b) of the Internal Revenue Code of 1986 [formerly 
    I.R.C. 1954] (or the corresponding provision of prior law),
        ``(C) the instrument described in subparagraph (A) has not been 
    amended on or after the date which is 30 days after the date of the 
    enactment of this Act [Aug. 13, 1981], and
        ``(D) the State has not enacted a statute applicable to such 
    gift under which such power of appointment is to be construed as 
    being defined in terms of, or by reference to, the amount of the 
    exclusion under such section 2503(b) after its amendment by 
    subsection (a),
then the amendment made by subsection (a) shall not apply to such 
gift.''
    Amendment by section 442(a)(3) of Pub. L. 97-34 applicable with 
respect to gifts made after Dec. 31, 1981, see section 442(e) of Pub. L. 
97-34, set out as a note under section 2501 of this title.


                    Effective Date of 1978 Amendment

    Section 702(j)(3)(B) of Pub. L. 95-600 provided that: ``The 
amendment made by paragraph (2) [amending this section] shall apply to 
transfers made after December 31, 1976.''


                    Effective Date of 1970 Amendment

    Amendment by Pub. L. 91-614 applicable with respect to gifts made 
after Dec. 31, 1970, see section 102(e) of Pub. L. 91-614, set out as a 
note under section 2501 of this title.


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in sections 529, 672, 1015, 2001, 2012, 
2057, 2101, 2523, 2611, 2642, 2701, 6019, 6039F, 6501 of this title.
