§2037 — Title 26 Internal Revenue Code | U.S. Code

Summary

Adds to the deceased person's estate for tax purposes any property they transferred during life (after September 7, 1916) unless it was a real sale for full fair payment, when two things are true. First, only someone who outlived the person can get possession or use of the property because of that transfer. Second, the person kept a reversionary interest — a chance the property could come back to them or their estate, or they kept the power to decide who gets it — and that chance was worth more than 5% of the property's value right before death. For transfers made before October 8, 1949, that reversionary interest counts only if it was clearly stated in the transfer document.

Title 26, §2037

Internal Revenue Code — Source: USLM XML via OLRC

(a)The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time after September 7, 1916, made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, if—

(1)possession or enjoyment of the property can, through ownership of such interest, be obtained only by surviving the decedent, and

(2)the decedent has retained a reversionary interest in the property (but in the case of a transfer made before October 8, 1949, only if such reversionary interest arose by the express terms of the instrument of transfer), and the value of such reversionary interest immediately before the death of the decedent exceeds 5 percent of the value of such property.

(b)For purposes of this section, the term “reversionary interest” includes a possibility that property transferred by the decedent—

(1)may return to him or his estate, or

(2)may be subject to a power of disposition by him,

Notes & Related Subsidiaries

Editorial Notes

Amendments

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”. 1962—Subsec. (a). Pub. L. 87–834 struck out provisions which excepted real property situated outside of the United States.

Statutory Notes and Related Subsidiaries

Effective Date

of 1962 AmendmentAmendment by Pub. L. 87–834 applicable to estates of decedents dying after Oct. 16, 1962, except as otherwise provided, see section 18(b) of Pub. L. 87–834, set out as a note under section 2031 of this title.

§2037 Transfers taking effect at death