§2702 — Special valuation rules in case of transfers of interests in trusts
25 cases·7 followed·3 distinguished·2 overruled·13 cited—28% support
Statute Text — 26 U.S.C. §2702
Solely for purposes of determining whether a transfer of an interest in trust to (or for the benefit of) a member of the transferor’s family is a gift (and the value of such transfer), the value of any interest in such trust retained by the transferor or any applicable family member (as defined in section 2701(e)(2)) shall be determined as provided in paragraph (2).
The value of any retained interest which is not a qualified interest shall be treated as being zero.
The value of any retained interest which is a qualified interest shall be determined under section 7520.
This subsection shall not apply to any transfer—
if such transfer is an incomplete gift,
if such transfer involves the transfer of an interest in trust all the property in which consists of a residence to be used as a personal residence by persons holding term interests in such trust, or
to the extent that regulations provide that such transfer is not inconsistent with the purposes of this section.
For purposes of subparagraph (A), the term “incomplete gift” means any transfer which would not be treated as a gift whether or not consideration was received for such transfer.
For purposes of this section, the term “qualified interest” means—
any interest which consists of the right to receive fixed amounts payable not less frequently than annually,
any interest which consists of the right to receive amounts which are payable not less frequently than annually and are a fixed percentage of the fair market value of the property in the trust (determined annually), and
any noncontingent remainder interest if all of the other interests in the trust consist of interests described in paragraph (1) or (2).
For purposes of this section—
The transfer of an interest in property with respect to which there is 1 or more term interests shall be treated as a transfer of an interest in a trust.
If 2 or more members of the same family acquire interests in any property described in paragraph (1) in the same transaction (or a series of related transactions), the person (or persons) acquiring the term interests in such property shall be treated as having acquired the entire property and then transferred to the other persons the interests acquired by such other persons in the transaction (or series of transactions). Such transfer shall be treated as made in exchange for the consideration (if any) provided by such other persons for the acquisition of their interests in such property.
The term “term interest” means—
a life interest in property, or
an interest in property for a term of years.
If the nonexercise of rights under a term interest in tangible property would not have a substantial effect on the valuation of the remainder interest in such property—
subparagraph (A) of subsection (a)(2) shall not apply to such term interest, and
the value of such term interest for purposes of applying subsection (a)(1) shall be the amount which the holder of the term interest establishes as the amount for which such interest could be sold to an unrelated third party.
In the case of a transfer of an income or remainder interest with respect to a specified portion of the property in a trust, only such portion shall be taken into account in applying this section to such transfer.
For purposes of this section, the term “member of the family” shall have the meaning given such term by section 2704(c)(2).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §25.2702-0 Table of contents
- Treas. Reg. §Treas. Reg. §25.2702-0(a) Transfers of retained interests in trust.
- Treas. Reg. §Treas. Reg. §25.2702-0(b) Amount of reduction.
- Treas. Reg. §Treas. Reg. §25.2702-0(c) Examples.
- Treas. Reg. §Treas. Reg. §25.2702-0(d) Examples.
- Treas. Reg. §Treas. Reg. §25.2702-0(e) Examples.
- Treas. Reg. §Treas. Reg. §25.2702-0(f) Qualified remainder interest.
- Treas. Reg. §Treas. Reg. §25.2702-1 Special valuation rules in the case of transfers of interests in trust
- Treas. Reg. §Treas. Reg. §25.2702-1(a) Scope of section 2702.
- Treas. Reg. §Treas. Reg. §25.2702-1(b) Effect of section 2702.
- Treas. Reg. §Treas. Reg. §25.2702-1(c) Exceptions to section 2702.
- Treas. Reg. §Treas. Reg. §25.2702-2 Definitions and valuation rules
- Treas. Reg. §Treas. Reg. §25.2702-2(a) Definitions.
- Treas. Reg. §Treas. Reg. §25.2702-2(b) Valuation of retained interests—(1) In general.
- Treas. Reg. §Treas. Reg. §25.2702-2(c) Valuation of a term interest in certain tangible property—(1) In general.
- Treas. Reg. §Treas. Reg. §25.2702-2(d) Examples.
- Treas. Reg. §Treas. Reg. §25.2702-2(i) §25.2702-2(i)
- Treas. Reg. §Treas. Reg. §25.2702-3 Qualified interests
- Treas. Reg. §Treas. Reg. §25.2702-3(a) In general.
- Treas. Reg. §Treas. Reg. §25.2702-3(b) Special rules for qualified annuity interests.
- Treas. Reg. §Treas. Reg. §25.2702-3(c) Special rules for qualified unitrust interests.
- Treas. Reg. §Treas. Reg. §25.2702-3(d) Requirements applicable to qualified annuity interests and qualified unitrust interests—(1) In general.
- Treas. Reg. §Treas. Reg. §25.2702-3(e) Examples.
- Treas. Reg. §Treas. Reg. §25.2702-3(f) Qualified remainder interest—(1) Requirements.
- Treas. Reg. §Treas. Reg. §25.2702-3(i) It is a qualified remainder interest in every respect.
25 Citing Cases
As pertinent herein, section 2702 provides: SEC.
As pertinent herein, section 2702 provides: SEC.
hare of that stock was $4.46. 2 Unless otherwise indicated, section references are to the applicable versions of the Internal Revenue Code, Rule references are to the Tax Court Rules of Practice and Procedure, and references to the regulations under sec. 2702 are to those regulations before amendment by T.D. 9181, 70 Fed. Reg. 9222 (Feb. 25, 2005). The amendments to those regulations are not applicable here in that they apply to trusts created on or after July 26, 2004 (the date the amendments w
ocket No. 470-00 in the amount of $137,953. - 2 - The issue for decision in these consolidated cases is whether a successor annuity interest of a spouse in a retained two-life annuity is a qualified interest that is subject to valuation pursuant to section 2702. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect on the date of the transfers, and all Rule references are to the Tax Court Rules of Practice and Procedure. Background The parties submitted th
The parties seek a summary adjudication regarding the same matter; i.e., the proper application of section 2702 to four grantor retained annuity trusts (GRAT’s).
The sole issue for decision is the valuation under section 2702 of gifts resulting from petitioner’s creation of two grantor retained annuity trusts (GRAT’s).
See also section 2702 for special rules applicable in valuing the gift made by the spouse under section 2519.
§ 25.2702-5. Levine placed 50% of her Minneapolis condo into a QPRT with a two-year term, and the other 50% in a different QPRT with a three-year term. During these terms, she was able to live in her condo rent free, but after the terms expired, title would pass to Nancy and Robert. If Levine wanted to continue to live in the co
2702(1) (1994)); see also J.L. Ward Assocs., 842 F. Supp. 2d at 1177; Cash Advance & Preferred Cash Loans v. Colo. ex rel. Suthers, 242 P.3d 1099, 1109 (Colo. 2010); Gavle v. Little Six, Inc., 555 N.W.2d 284, 294 (Minn. 1996). While Uniband appears to have employed TMBCI members to perform its data entry services, it has not shown the extent o
term. The term ofthe trust was 180 months, subject to decedent's power to reduce the term. The residence trust agreement further - 8 - [*8] provided that decedent intended the residence trust to qualify as a qualified personal residence trust under section 2702. Upon termination ofthe residence trust term decedent or her estate would receive the trust property and any accrued income. Ifdecedent was living at termination, the trust property would be distributed equally to her children or their ch
2702(1) (1994)); see also J.L. Ward Assocs., 842 F. Supp. 2d at 1177; Cash Advance & Preferred Cash Loans v. Colo. ex rel. Suthers, 242 P.3d 1099, 1109 (Colo. 2010); Gavle v. Little Six, Inc., 555 N.W.2d 284, 294 (Minn. 1996). While Uniband appears to have employed TMBCI members to perform its data entry services, it has not shown the extent o
- 4 - On November 23, 1998, petitioners and respondent agreed upon certain audit adjustments regarding petitioners’ 1993, 1994, 1995, and 1996 Federal gift tax years, except for the issue of whether the spousal interests provided for in the GRATs were qualified interests within the meaning of section 2702 for petitioners’ 1993, 1994, and 1995 Federal gift tax years (the GRAT issues).