
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: 26USC2514]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                    Subtitle B--Estate and Gift Taxes
 
                          CHAPTER 12--GIFT TAX
 
                         Subchapter B--Transfers
 
Sec. 2514. Powers of appointment


(a) Powers created on or before October 21, 1942

    An exercise of a general power of appointment created on or before 
October 21, 1942, shall be deemed a transfer of property by the 
individual possessing such power; but the failure to exercise such a 
power or the complete release of such a power shall not be deemed an 
exercise thereof. If a general power of appointment created on or before 
October 21, 1942, has been partially released so that it is no longer a 
general power of appointment, the subsequent exercise of such power 
shall not be deemed to be the exercise of a general power of appointment 
if--
        (1) such partial release occurred before November 1, 1951, or
        (2) the donee of such power was under a legal disability to 
    release such power on October 21, 1942, and such partial release 
    occurred not later than six months after the termination of such 
    legal disability.

(b) Powers created after October 21, 1942

    The exercise or release of a general power of appointment created 
after October 21, 1942, shall be deemed a transfer of property by the 
individual possessing such power.

(c) Definition of general power of appointment

    For purposes of this section, the term ``general power of 
appointment'' means a power which is exercisable in favor of the 
individual possessing the power (hereafter in this subsection referred 
to as the ``possessor''), his estate, his creditors, or the creditors of 
his estate; except that--
        (1) A power to consume, invade, or appropriate property for the 
    benefit of the possessor which is limited by an ascertainable 
    standard relating to the health, education, support, or maintenance 
    of the possessor shall not be deemed a general power of appointment.
        (2) A power of appointment created on or before October 21, 
    1942, which is exercisable by the possessor only in conjunction with 
    another person shall not be deemed a general power of appointment.
        (3) In the case of a power of appointment created after October 
    21, 1942, which is exercisable by the possessor only in conjunction 
    with another person--
            (A) if the power is not exercisable by the possessor except 
        in conjunction with the creator of the power--such power shall 
        not be deemed a general power of appointment;
            (B) if the power is not exercisable by the possessor except 
        in conjunction with a person having a substantial interest, in 
        the property subject to the power, which is adverse to exercise 
        of the power in favor of the possessor--such power shall not be 
        deemed a general power of appointment. For the purposes of this 
        subparagraph a person who, after the death of the possessor, may 
        be possessed of a power of appointment (with respect to the 
        property subject to the possessor's power) which he may exercise 
        in his own favor shall be deemed as having an interest in the 
        property and such interest shall be deemed adverse to such 
        exercise of the possessor's power;
            (C) if (after the application of subparagraphs (A) and (B)) 
        the power is a general power of appointment and is exercisable 
        in favor of such other person--such power shall be deemed a 
        general power of appointment only in respect of a fractional 
        part of the property subject to such power, such part to be 
        determined by dividing the value of such property by the number 
        of such persons (including the possessor) in favor of whom such 
        power is exercisable.

    For purposes of subparagraphs (B) and (C), a power shall be deemed 
    to be exercisable in favor of a person if it is exercisable in favor 
    of such person, his estate, his creditors, or the creditors of his 
    estate.

(d) Creation of another power in certain cases

    If a power of appointment created after October 21, 1942, is 
exercised by creating another power of appointment which, under the 
applicable local law, can be validly exercised so as to postpone the 
vesting of any estate or interest in the property which was subject to 
the first power, or suspend the absolute ownership or power of 
alienation of such property, for a period ascertainable without regard 
to the date of the creation of the first power, such exercise of the 
first power shall, to the extent of the property subject to the second 
power, be deemed a transfer of property by the individual possessing 
such power.

(e) Lapse of power

    The lapse of a power of appointment created after October 21, 1942, 
during the life of the individual possessing the power shall be 
considered a release of such power. The rule of the preceding sentence 
shall apply with respect to the lapse of powers during any calendar year 
only to the extent that the property which could have been appointed by 
exercise of such lapsed powers exceeds in value the greater of the 
following amounts:
        (1) $5,000, or
        (2) 5 percent of the aggregate value of the assets out of which, 
    or the proceeds of which, the exercise of the lapsed powers could be 
    satisfied.

(f) Date of creation of power

    For purposes of this section a power of appointment created by a 
will executed on or before October 21, 1942, shall be considered a power 
created on or before such date if the person executing such will dies 
before July 1, 1949, without having republished such will, by codicil or 
otherwise, after October 21, 1942.

(Aug. 16, 1954, ch. 736, 68A Stat. 407; Pub. L. 94-455, title XX, 
Sec. 2009(b)(4)(F), Oct. 4, 1976, 90 Stat. 1894.)


                               Amendments

    1976--Subsec. (b). Pub. L. 94-455 struck out ``A disclaimer or 
renunciation of such a power of appointment shall not be deemed a 
release of such power.''


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-455 applicable to transfers creating an 
interest in person disclaiming made after Dec. 31, 1976, see section 
2009(e)(2) of Pub. L. 94-455, set out as a note under section 2518 of 
this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 2503, 2513 of this title.
