PRIA, Government Policy, Made Personal

Summary

The generation-skipping tax must be paid by different people depending on the transfer: the person who receives a taxable distribution pays; the trustee pays for a taxable termination or a direct skip from a trust; and the person who makes a direct skip not from a trust pays. The tax is charged to the property transferred unless the governing document specifically says otherwise. Estate and gift tax rules about liability and liens also apply.

Title 26, §2603

Internal Revenue Code, Source: USLM XML via OLRC

(a)Personal liability

(1)Taxable distributions

In the case of a taxable distribution, the tax imposed by section 2601 shall be paid by the transferee.

(2)Taxable termination

In the case of a taxable termination or a direct skip from a trust, the tax shall be paid by the trustee.

(3)Direct skip

In the case of a direct skip (other than a direct skip from a trust), the tax shall be paid by the transferor.

(b)Source of tax

Unless otherwise directed pursuant to the governing instrument by specific reference to the tax imposed by this chapter, the tax imposed by this chapter on a generation-skipping transfer shall be charged to the property constituting such transfer.

(c)Cross reference

For provisions making estate and gift tax provisions with respect to transferee liability, liens, and related matters applicable to the tax imposed by section 2601, see section 2661.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1986—Pub. L. 99–514 amended section generally, substituting tax liability provisions consisting of language placing liability, under different circumstances, on the transferee, the trustee, or the transferor, the source of the tax, and a cross reference to section 2661 for former provisions which covered the question of liability for tax with language covering the trustee and the distributee, the limitation on personal liability of the trustee who relied on certain information furnished by the Secretary, the limitation on personal liability of distributee, and the lien on property transferred until the tax was paid in full or became unenforceable by reason of lapse of time.

Statutory Notes and Related Subsidiaries

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.

§2603 Liability for Tax