Title 26 — Internal Revenue CodeRelease 119-73
§2501 Imposition of tax
Title 26 › Subtitle Subtitle B— - Estate and Gift Taxes › Chapter CHAPTER 12— - GIFT TAX › Subchapter Subchapter A— - Determination of Tax Liability › § 2501
Summary
A gift tax must be paid each calendar year when any person gives away property, whether they live in the United States or not. Gifts of intangible property (like stocks or bonds) by a nonresident who is not a U.S. citizen are generally not taxed, except when the giver falls under section 877(b) for that year. Gifts to political organizations (section 527) and to certain tax-exempt organizations (parts of section 501(c) and exempt under 501(a)) are not subject to the tax. If a giver covered by section 877(b) transfers stock in certain foreign corporations that they largely control, the stock is treated as U.S.-situated and its value is figured by the share of the company’s assets that are located in the United States. The ownership tests use 10% and more-than-50% thresholds. A U.S. citizen who lives in a U.S. possession is usually treated as a U.S. citizen for these gift tax rules, unless their U.S. citizenship came only from being a citizen of the possession or from birth or residence there; in that narrow case they are treated as a nonresident noncitizen. See sections 1015(d) and 2511(a) for related basis and exclusion rules.
Full Legal Text
Title 26, §2501
Internal Revenue Code — Source: USLM XML via OLRC
(a)(1)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)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)(A)Paragraph (2) shall not apply in the case of a donor to whom section 877(b) applies for the taxable year which includes the date of the transfer.
(B)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.
(4)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.
(5)(A)In the case of a transfer of stock in a foreign corporation described in subparagraph (B) by a donor to whom section 877(b) applies for the taxable year which includes the date of the transfer—
(i)section 2511(a) shall be applied without regard to whether such stock is situated within the United States, and
(ii)the value of such stock for purposes of this chapter shall be its U.S.-asset value determined under subparagraph (C).
(B)A foreign corporation is described in this subparagraph with respect to a donor if—
(i)the donor owned (within the meaning of section 958(a)) at the time of such transfer 10 percent or more of the total combined voting power of all classes of stock entitled to vote of the foreign corporation, and
(ii)such donor owned (within the meaning of section 958(a)), or is considered to have owned (by applying the ownership rules of section 958(b)), at the time of such transfer, more than 50 percent of—
(I)the total combined voting power of all classes of stock entitled to vote of such corporation, or
(II)the total value of the stock of such corporation.
(C)For purposes of subparagraph (A), the U.S.-asset value of stock shall be the amount which bears the same ratio to the fair market value of such stock at the time of transfer as—
(i)the fair market value (at such time) of the assets owned by such foreign corporation and situated in the United States, bears to
(ii)the total fair market value (at such time) of all assets owned by such foreign corporation.
(6)Paragraph (1) shall not apply to the transfer of money or other property to an organization described in paragraph (4), (5), or (6) of section 501(c) and exempt from tax under section 501(a), for the use of such organization.
(b)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)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.
(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).
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2015—Subsec. (a)(6). Pub. L. 114–113 added par. (6). 2004—Subsec. (a)(3) to (5). Pub. L. 108–357 added pars. (3) and (5), redesignated former par. (5) as (4), and struck out former pars. (3) and (4) which related to exception of certain individuals from taxable transfers and burden of proof. 1997—Subsec. (a)(3)(C). Pub. L. 105–34 substituted “donor” for “decedent”. 1996—Subsec. (a)(3). Pub. L. 104–191, § 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, § 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, § 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, § 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, § 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, § 4(d)(2), struck out “who is” before “not a citizen”. Subsecs. (c), (d). Pub. L. 86–779, § 4(d)(1), added subsec. (c) and redesignated former subsec. (c) as (d). 1958—Subsec. (b). Pub. L. 85–866, § 102(b), added subsec. (b) and redesignated former subsec. (b) as (c). Subsec. (c). Pub. L. 85–866, § 102(b), redesignated former subsec. (b) as (c) and Pub. L. 85–866, § 43(b), made the heading read in the plural, designated existing provisions as par. (2) and added par. (1).
Statutory Notes and Related Subsidiaries
Effective Date
of 2015 Amendment Pub. L. 114–113, div. Q, title IV, § 408(b), Dec. 18, 2015, 129 Stat. 3121, provided that: “The amendment made by subsection (a) [amending this section] shall apply to gifts made after the date of the enactment of this Act [Dec. 18, 2015].”
Effective Date
of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to individuals who expatriate after June 3, 2004, see section 804(f) of Pub. L. 108–357, set out as a note under section 877 of this title.
Effective Date
of 1997 AmendmentAmendment 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 AmendmentAmendment 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 AmendmentAmendment 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 AmendmentAmendment 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 Pub. L. 97–34, title IV, § 442(e), Aug. 13, 1981, 95 Stat. 323, provided that: “The
Amendments
made by this section [amending this section and section 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 Pub. L. 94–455, title XIX, § 1902(c)(2), Oct. 4, 1976, 90 Stat. 1806, as amended by Pub. L. 95–600, title VII, § 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 section 2522 and 2523 of this title] shall apply with respect to gifts made after December 31, 1976.”
Effective Date
of 1975 Amendment Pub. L. 93–625, § 14(b), Jan. 3, 1975, 88 Stat. 2121, 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 Pub. L. 91–614, title I, § 102(e), Dec. 31, 1970, 84 Stat. 1842, provided that: “The
Amendments
made by this section [amending this section and section 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 Pub. L. 89–809, title I, § 109(c), Nov. 13, 1966, 80 Stat. 1575, 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 Pub. L. 86–779, § 4(e)(3), Sept. 14, 1960, 74 Stat. 1000, 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 AmendmentAmendment 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 2014 of this title.
Construction
of 2015 Amendment Pub. L. 114–113, div. Q, title IV, § 408(c), Dec. 18, 2015, 129 Stat. 3121, provided that: “Nothing in the amendment made by subsection (a) [amending this section] shall be construed to create any inference with respect to whether any transfer of property (whether made before, on, or after the date of the enactment of this Act [Dec. 18, 2015]) to an organization described in paragraph (4), (5), or (6) of section 501(c) of the Internal Revenue Code of 1986 is a transfer of property by gift for purposes of chapter 12 of such Code.” Election To Have
Amendments
by Title IV of the Economic Recovery Tax Act of 1981 Not Apply Pub. L. 97–448, title I, § 104(d)(3), Jan. 12, 1983, 96 Stat. 2383, as amended by Pub. L. 99–514, § 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.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 2501
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73