§2651 Generation assignment

Summary

Decides which generation a person belongs to for tax rules about gifts and inheritances. If someone is a direct descendant of one of the giver’s grandparents, you compare how many generations each is from that grandparent to pick the generation. The same rule applies if the person is a descendant of a grandparent of the giver’s spouse. Adopted and half-blood relatives count like blood relatives. Anyone who has ever been married to the giver is put in the giver’s generation, and anyone who has ever been married to a person covered above is put in that person’s generation. If no rule above fits, use birth dates: someone born within 12½ years after the giver is in the giver’s generation; born more than 12½ but not more than 37½ years after is one generation younger; add a new generation for each 25 years after that. For deciding whether a transfer “skips” a generation for tax purposes, a descendant of a parent of the giver (or the giver’s spouse) is treated based on whether that descendant’s parent (the nearer generation) was dead at the earliest time the transfer was subject to tax. A person who would fall in more than one generation is placed in the youngest one. When an estate, trust, partnership, corporation, or similar entity owns property, each person who benefits from that entity is treated as owning an interest and is assigned a generation, except for certain tax-exempt organizations, some charitable trusts, and government entities.