View all text of Subchapter C [§ 2521 - § 2524]
§ 2523. Gift to spouse
(a) Allowance of deduction
(b) Life estate or other terminable interest
Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, such interest transferred to the spouse will terminate or fail, no deduction shall be allowed with respect to such interest—
(1) if the donor retains in himself, or transfers or has transferred (for less than an adequate and full consideration in money or money’s worth) to any person other than such donee spouse (or the estate of such spouse), an interest in such property, and if by reason of such retention or transfer the donor (or his heirs or assigns) or such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest transferred to the donee spouse; or
(2) if the donor immediately after the transfer to the donee spouse has a power to appoint an interest in such property which he can exercise (either alone or in conjunction with any person) in such manner that the appointee may possess or enjoy any part of such property after such termination or failure of the interest transferred to the donee spouse. For purposes of this paragraph, the donor shall be considered as having immediately after the transfer to the donee spouse such power to appoint even though such power cannot be exercised until after the lapse of time, upon the occurrence of an event or contingency, or on the failure of an event or contingency to occur.
An exercise or release at any time by the donor, either alone or in conjunction with any person, of a power to appoint an interest in property, even though not otherwise a transfer, shall, for purposes of paragraph (1), be considered as a transfer by him. Except as provided in subsection (e), where at the time of the transfer it is impossible to ascertain the particular person or persons who may receive from the donor an interest in property so transferred by him, such interest shall, for purposes of paragraph (1), be considered as transferred to a person other than the donee spouse.
(c) Interest in unidentified assets
(d) Joint interests
(e) Life estate with power of appointment in donee spouse
Where the donor transfers an interest in property, if by such transfer his spouse is entitled for life to all of the income from the entire interest, or all the income from a specific portion thereof, payable annually or at more frequent intervals, with power in the donee spouse to appoint the entire interest, or such specific portion (exercisable in favor of such donee spouse, or of the estate of such donee spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), and with no power in any other person to appoint any part of such interest, or such portion, to any person other than the donee spouse—
(1) the interest, or such portion, so transferred shall, for purposes of subsection (a) be considered as transferred to the donee spouse, and
(2) no part of the interest, or such portion, so transferred shall, for purposes of subsection (b)(1), be considered as retained in the donor or transferred to any person other than the donee spouse.
This subsection shall apply only if, by such transfer, such power in the donee spouse to appoint the interest, or such portion, whether exercisable by will or during life, is exercisable by such spouse alone and in all events. For purposes of this subsection, the term “specific portion” only includes a portion determined on a fractional or percentage basis.
(f) Election with respect to life estate for donee spouse
(1) In general
In the case of qualified terminable interest property—
(A) for purposes of subsection (a), such property shall be treated as transferred to the donee spouse, and
(B) for purposes of subsection (b)(1), no part of such property shall be considered as retained in the donor or transferred to any person other than the donee spouse.
(2) Qualified terminable interest property
For purposes of this subsection, the term “qualified terminable interest property” means any property—
(A) which is transferred by the donor spouse,
(B) in which the donee spouse has a qualifying income interest for life, and
(C) to which an election under this subsection applies.
(3) Certain rules made applicable
(4) Election
(A) Time and manner
(B) Election irrevocable
(5) Treatment of interest retained by donor spouse
(A) In general
In the case of any qualified terminable interest property—
(i) such property shall not be includible in the gross estate of the donor spouse, and
(ii) any subsequent transfer by the donor spouse of an interest in such property shall not be treated as a transfer for purposes of this chapter.
(B) Subparagraph (A) not to apply after transfer by donee spouse
(6) Treatment of joint and survivor annuities
In the case of a joint and survivor annuity where only the donor spouse and donee spouse have the right to receive payments before the death of the last spouse to die—
(A) the donee spouse’s interest shall be treated as a qualifying income interest for life,
(B) the donor spouse shall be treated as having made an election under this subsection with respect to such annuity unless the donor spouse otherwise elects on or before the date specified in paragraph (4)(A),
(C) paragraph (5) and section 2519 shall not apply to the donor spouse’s interest in the annuity, and
(D) if the donee spouse dies before the donor spouse, no amount shall be includible in the gross estate of the donee spouse under section 2044 with respect to such annuity.
An election under subparagraph (B), once made, shall be irrevocable.
(g) Special rule for charitable remainder trusts
(1) In general
(2) Definitions
(h) Denial of double deduction
(i) Disallowance of marital deduction where spouse not citizen
If the spouse of the donor is not a citizen of the United States—
(1) no deduction shall be allowed under this section,
(2) section 2503(b) shall be applied with respect to gifts which are made by the donor to such spouse and with respect to which a deduction would be allowable under this section but for paragraph (1) by substituting “$100,000” for “$10,000”, and
(3) the principles of sections 2515 and 2515A (as such sections were in effect before their repeal by the Economic Recovery Tax Act of 1981) shall apply, except that the provisions of such section 2515 providing for an election shall not apply.
This subsection shall not apply to any transfer resulting from the acquisition of rights under a joint and survivor annuity described in subsection (f)(6).
(Aug. 16, 1954, ch. 736, 68A Stat. 412; Pub. L. 91–614, title I, § 102(c)(3), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94–455, title XIX, § 1902(a)(12)(E), title XX, § 2002(b), Oct. 4, 1976, 90 Stat. 1806, 1854; Pub. L. 97–34, title IV, § 403(b)(1), (2), (d)(2), Aug. 13, 1981, 95 Stat. 301, 303; Pub. L. 97–448, title I, § 104(a)(2)(B), (4)–(6), Jan. 12, 1983, 96 Stat. 2380, 2381; Pub. L. 99–514, title XVIII, § 1879(n)(1), Oct. 22, 1986, 100 Stat. 2910; Pub. L. 100–647, title V, § 5033(b), title VI, § 6152(b), Nov. 10, 1988, 102 Stat. 3672, 3725; Pub. L. 101–239, title VII, § 7815(d)(1)(A), (2), Dec. 19, 1989, 103 Stat. 2415; Pub. L. 101–508, title XI, § 11702(g)(1), Nov. 5, 1990, 104 Stat. 1388–515; Pub. L. 102–486, title XIX, § 1941(b), Oct. 24, 1992, 106 Stat. 3036; Pub. L. 105–34, title XVI, § 1604(g)(4), Aug. 5, 1997, 111 Stat. 1099; Pub. L. 115–141, div. U, title IV, § 401(a)(205), (206), Mar. 23, 2018, 132 Stat. 1194.)