
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: 26USC2612]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                    Subtitle B--Estate and Gift Taxes
 
            CHAPTER 13--TAX ON GENERATION-SKIPPING TRANSFERS
 
               Subchapter B--Generation-Skipping Transfers
 
Sec. 2612. Taxable termination; taxable distribution; direct 
        skip
        

(a) Taxable termination

                          (1) General rule

        For purposes of this chapter, the term ``taxable termination'' 
    means the termination (by death, lapse of time, release of power, or 
    otherwise) of an interest in property held in a trust unless--
            (A) immediately after such termination, a non-skip person 
        has an interest in such property, or
            (B) at no time after such termination may a distribution 
        (including distributions on termination) be made from such trust 
        to a skip person.

         (2) Certain partial terminations treated as taxable

        If, upon the termination of an interest in property held in 
    trust by reason of the death of a lineal descendant of the 
    transferor, a specified portion of the trust's assets are 
    distributed to 1 or more skip persons (or 1 or more trusts for the 
    exclusive benefit of such persons), such termination shall 
    constitute a taxable termination with respect to such portion of the 
    trust property.

(b) Taxable distribution

    For purposes of this chapter, the term ``taxable distribution'' 
means any distribution from a trust to a skip person (other than a 
taxable termination or a direct skip).

(c) Direct skip

    For purposes of this chapter--

                           (1) In general

        The term ``direct skip'' means a transfer subject to a tax 
    imposed by chapter 11 or 12 of an interest in property to a skip 
    person.

                  (2) Look-thru rules not to apply

        Solely for purposes of determining whether any transfer to a 
    trust is a direct skip, the rules of section 2651(f)(2) shall not 
    apply.

(Added Pub. L. 94-455, title XX, Sec. 2006(a), Oct. 4, 1976, 90 Stat. 
1883; amended Pub. L. 99-514, title XIV, Sec. 1431(a), Oct. 22, 1986, 
100 Stat. 2719; Pub. L. 100-647, title I, Sec. 1014(g)(5)(B), (7), (15), 
Nov. 10, 1988, 102 Stat. 3564-3566; Pub. L. 105-34, title V, 
Sec. 511(b), Aug. 5, 1997, 111 Stat. 861.)


                               Amendments

    1997--Subsec. (c)(2). Pub. L. 105-34, Sec. 511(b)(2), substituted 
``section 2651(f)(2)'' for ``section 2651(e)(2)''.
    Pub. L. 105-34, Sec. 511(b)(1), redesignated par. (3) as (2) and 
struck out heading and text of former par. (2). Text read as follows: 
``For purposes of determining whether any transfer is a direct skip, 
if--
        ``(A) an individual is a grandchild of the transferor (or the 
    transferor's spouse or former spouse), and
        ``(B) as of the time of the transfer, the parent of such 
    individual who is a lineal descendant of the transferor (or the 
    transferor's spouse or former spouse) is dead,
such individual shall be treated as if such individual were a child of 
the transferor and all of that grandchild's children shall be treated as 
if they were grandchildren of the transferor. In the case of lineal 
descendants below a grandchild, the preceding sentence may be reapplied. 
If any transfer of property to a trust would be a direct skip but for 
this paragraph, any generation assignment under this paragraph shall 
apply also for purposes of applying this chapter to transfers from the 
portion of the trust attributable to such property.''
    Subsec. (c)(3). Pub. L. 105-34, Sec. 511(b)(1), redesignated par. 
(3) as (2).
    1988--Subsec. (a)(2). Pub. L. 100-647, Sec. 1014(g)(15), amended 
par. (2) generally. Prior to amendment, par. (2) read as follows: ``If, 
upon the termination of an interest in property held in a trust, a 
specified portion of the trust assets are distributed to skip persons 
who are lineal descendants of the holder of such interest (or to 1 or 
more trusts for the exclusive benefit of such persons), such termination 
shall constitute a taxable termination with respect to such portion of 
the trust property.''
    Subsec. (c)(2). Pub. L. 100-647, Sec. 1014(g)(7), in closing 
provisions, inserted at end ``If any transfer of property to a trust 
would be a direct skip but for this paragraph, any generation assignment 
under this paragraph shall apply also for purposes of applying this 
chapter to transfers from the portion of the trust attributable to such 
property.''
    Subsec. (c)(3). Pub. L. 100-647, Sec. 1014(g)(5)(B), added par. (3).
    1986--Pub. L. 99-514 amended section generally, substituting 
provisions covering definition and application of ``taxable 
termination'', ``taxable distribution'', and ``direct skip'' for former 
provisions which indicated who the ``deemed transferor'' would be for 
purposes of this chapter and that, for purposes of determining the 
person deemed the transferor, a parent related to the grantor of a trust 
by blood or adoption was to be deemed more closely related than a parent 
related to a grantor by marriage.


                    Effective Date of 1997 Amendment

    Section 511(c) of Pub. L. 105-34 provided that: ``The amendments 
made by this section [amending this section and section 2651 of this 
title] shall apply to terminations, distributions, and transfers 
occurring after December 31, 1997.''


                    Effective Date of 1988 Amendment

    Amendment by 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

    Section applicable to generation-skipping transfers (within the 
meaning of section 2611 of this title) made after Oct. 22, 1986, except 
as otherwise provided, see section 1433 of Pub. L. 99-514, set out as a 
note under section 2601 of this title.

                  Section Referred to in Other Sections

    This section is referred to in section 6166 of this title.
