§2801 — Imposition of tax
7 citing cases
Statute Text — 26 U.S.C. §2801
If, during any calendar year, any United States citizen or resident receives any covered gift or bequest, there is hereby imposed a tax equal to the product of—
the highest rate of tax specified in the table contained in section 2001(c) as in effect on the date of such receipt, and
the value of such covered gift or bequest.
The tax imposed by subsection (a) on any covered gift or bequest shall be paid by the person receiving such gift or bequest.
Subsection (a) shall apply only to the extent that the value of covered gifts and bequests received by any person during the calendar year exceeds the dollar amount in effect under section 2503(b) for such calendar year.
The tax imposed by subsection (a) on any covered gift or bequest shall be reduced by the amount of any gift or estate tax paid to a foreign country with respect to such covered gift or bequest.
For purposes of this chapter, the term “covered gift or bequest” means—
any property acquired by gift directly or indirectly from an individual who, at the time of such acquisition, is a covered expatriate, and
any property acquired directly or indirectly by reason of the death of an individual who, immediately before such death, was a covered expatriate.
Such term shall not include—
any property shown on a timely filed return of tax imposed by chapter 12 which is a taxable gift by the covered expatriate, and
any property included in the gross estate of the covered expatriate for purposes of chapter 11 and shown on a timely filed return of tax imposed by chapter 11 of the estate of the covered expatriate.
Such term shall not include any property with respect to which a deduction would be allowed under section 2055, 2056, 2522, or 2523, whichever is appropriate, if the decedent or donor were a United States person.
In the case of a covered gift or bequest made to a domestic trust—
subsection (a) shall apply in the same manner as if such trust were a United States citizen, and
the tax imposed by subsection (a) on such gift or bequest shall be paid by such trust.
In the case of a covered gift or bequest made to a foreign trust, subsection (a) shall apply to any distribution attributable to such gift or bequest from such trust (whether from income or corpus) to a United States citizen or resident in the same manner as if such distribution were a covered gift or bequest.
There shall be allowed as a deduction under section 164 the amount of tax imposed by this section which is paid or accrued by a United States citizen or resident by reason of a distribution from a foreign trust, but only to the extent such tax is imposed on the portion of such distribution which is included in the gross income of such citizen or resident.
Solely for purposes of this section, a foreign trust may elect to be treated as a domestic trust. Such an election may be revoked with the consent of the Secretary.
For purposes of this section, the term “covered expatriate” has the meaning given to such term by section 877A(g)(1).
Treasury Regulations
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Treas. Reg. §28.2801-0Table of contents
This section lists the headings in §§ 28.2801-1 through 28.2801-7.
(a) In general.
(b) Applicability date.
(a) Overview.
(b) U.S. citizen or resident.
(c) Domestic trust.
(d) Foreign trust.
(1) In general.
(2) Electing foreign trust.
(3) Non-electing foreign trust.
(e) U.S. recipient.
(f) Covered bequest.
(g) Covered gift.
(h) Expatriate and covered expatriate.
(i) Indirect acquisition of property.
(j) Power of appointment.
(k) Section 2801 tax.
(l) Section 2801(c) amount.
(m) Statutory references.
(1) Code.
(2) Subtitle B.
(n) Applicability date.
(a) Covered gift.
(b) Covered bequest.
(c) Exceptions to covered gift and covered bequest.
(1) Reported taxable gifts.
(2) Property reported as subject to estate tax.
(3) Covered bequest previously subject to section 2801 tax as a covered gift.
(4) Transfers to charity.
(5) Transfers to spouse.
(6) Qualified disclaimers.
(d) Covered gifts and covered bequests made in trust.
(e) Powers of appointment.
(1) Covered expatriate as holder of power.
(2) Covered expatriate as grantor of power.
(f) Examples.
(g) Applicability date.
(a) Liability for tax.
(1) U.S. citizen or resident.
(2) Domestic trust.
(i) In general.
(ii) Generation-skipping transfer tax.
(iii) [Reserved].
(iv) Migrated foreign trust.
(3) Foreign trust.
(i) In general.
(ii) Income tax deduction.
(b) Computation of tax.
(1) In general.
(2) Net covered gifts and covered bequests.
(c) Value of covered gift or covered bequest.
(d) Date of receipt.
(1) In general.
(2) Covered gift.
(3) Covered bequest.
(4) Domestic trusts and electing foreign trusts.
(5) Non-electing foreign trusts.
(6) Powers of appointment.
(i) Covered expatriate as holder of power.
(ii) Covered expatriate as grantor of power.
(7) Indirect receipts.
(8) Future interest in property not in trust.
(i) Date of receipt.
(ii) Date-of-receipt election for future interest in property not in trust.
(e) Reduction of tax for foreign gift or estate tax paid.
(1) In general.
(2) Protective claim for refund.
(f) Examples.
(g) Applicability date.
(a) In general.
(b) Distribution defined.
(c) Amount of distribution attributable to covered gift or covered bequest.
(1) Section 2801 ratio.
(i) In general.
(ii) Computation.
(2) Effect of reported transfer and tax payment.
(3) Inadequate information to calculate section 2801 ratio.
(d) Foreign trust treated as domestic trust.
(1) Election required.
(2) Effect of election.
(3) Time and manner of making the election.
(i) When to make the election.
(ii) Requirements for a valid election.
(iii) Section 2801 tax payable with the election.
(iv) Designation of U.S. agent.
(A) In general.
(B) Role of designated agent.
(C) Effect of appointment of agent.
(4) Filing requirement.
(5) Duration of status as electing foreign trust.
(i) In general.
(ii) Termination.
(A) Manner of termination.
(B) Effective date of termination.
(C) Notice requirements upon termination.
(iii) Subsequent elections.
(6) Dispute as to amount of section 2801 tax owed by electing foreign trust.
(i) Procedure.
(ii) Effect of compliance.
(iii) Effect of failing to comply (imperfect election).
(A) In general.
(B) Notice to permissible distributees.
(C) Reasonable cause.
(D) Interim period.
(7) No overpayment caused solely by virtue of defect in election.
(e) Examples.
(f) Applicability date.
(a) Determination of basis.
(b) Generation-skipping transfer tax.
(c) Information returns.
(1) Gifts and bequests.
(2) Foreign trust distributions.
(3) Penalties and use of information.
(d) Application of penalties.
(1) Accuracy-related penalties on underpayments.
(2) Penalty for substantial and gross valuation misstatements attributable to incorrect appraisals.
(3) Penalty for failure to file a return and to pay tax.
(e) Applicability date.
(a) Responsibility of U.S. citizens or residents receiving gifts or bequests from expatriates.
(b) Disclosure of return and return information.
(1) In general.
(2) Rebuttable presumption.
(c) Protective return.
(d) Applicability date.
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Treas. Reg. §28.2801-0(a)Responsibility of U.
Responsibility of U.S. citizens or residents receiving gifts or bequests from expatriates.
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Treas. Reg. §28.2801-0(b)Disclosure of return and return information.
Disclosure of return and return information.
(1) In general.
(2) Rebuttable presumption.
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Treas. Reg. §28.2801-0(c)Protective return.
Protective return.
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Treas. Reg. §28.2801-0(d)Applicability date.
Applicability date.
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Treas. Reg. §28.2801-0(e)Applicability date.
Applicability date.
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Treas. Reg. §28.2801-0(f)Applicability date.
Applicability date.
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Treas. Reg. §28.2801-0(g)Applicability date.
Applicability date.
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Treas. Reg. §28.2801-0(h)Expatriate and covered expatriate.
Expatriate and covered expatriate.
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Treas. Reg. §28.2801-0(i)Procedure.
Procedure.
(ii) Effect of compliance.
(iii) Effect of failing to comply (imperfect election).
(A) In general.
(B) Notice to permissible distributees.
(C) Reasonable cause.
(D) Interim period.
(7) No overpayment caused solely by virtue of defect in election.
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Treas. Reg. §28.2801-0(j)Power of appointment.
Power of appointment.
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Treas. Reg. §28.2801-0(k)Section 2801 tax.
Section 2801 tax.
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Treas. Reg. §28.2801-0(l)Section 2801(c) amount.
Section 2801(c) amount.
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Treas. Reg. §28.2801-0(m)Statutory references.
Statutory references.
(1) Code.
(2) Subtitle B.
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Treas. Reg. §28.2801-0(n)Applicability date.
Applicability date.
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Treas. Reg. §28.2801-1Tax on certain gifts and bequests from covered expatriates
(a) In general. Section 2801 of the Internal Revenue Code (Code) imposes a tax (section 2801 tax) on covered gifts and covered bequests, including distributions attributable to covered gifts and covered bequests from non-electing foreign trusts, received by a U.S. citizen or resident from a covered expatriate during a calendar year. Domestic trusts, as well as electing foreign trusts, are subject to tax under section 2801 in the same manner as if the trusts were U.S. citizens. See section 2801(e)(4)(A)(i) and (B)(iii). Accordingly, the section 2801 tax is paid by the U.S. citizen or resident, domestic trust, or electing foreign trust that receives the covered gift or covered bequest, including distributions attributable to covered gifts and covered bequests from non-electing foreign trusts. For purposes of the regulations in this part 28 (26 CFR part 28), references to U.S. citizens are considered to include domestic trusts and electing foreign trusts.
(b) Applicability date. This section applies to covered gifts or covered bequests received on or after January 1, 2025.
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Treas. Reg. §28.2801-1(a)In general.
In general. Section 2801 of the Internal Revenue Code (Code) imposes a tax (section 2801 tax) on covered gifts and covered bequests, including distributions attributable to covered gifts and covered bequests from non-electing foreign trusts, received by a U.S. citizen or resident from a covered expatriate during a calendar year. Domestic trusts, as well as electing foreign trusts, are subject to tax under section 2801 in the same manner as if the trusts were U.S. citizens. See section 2801(e)(4)(A)(i) and (B)(iii). Accordingly, the section 2801 tax is paid by the U.S. citizen or resident, domestic trust, or electing foreign trust that receives the covered gift or covered bequest, including distributions attributable to covered gifts and covered bequests from non-electing foreign trusts. For purposes of the regulations in this part 28 (26 CFR part 28), references to U.S. citizens are considered to include domestic trusts and electing foreign trusts.
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Treas. Reg. §28.2801-1(b)Applicability date.
Applicability date. This section applies to covered gifts or covered bequests received on or after January 1, 2025.
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Treas. Reg. §28.2801-2Definitions
(a) Overview. This section provides definitions of terms applicable solely for purposes of section 2801 of the Code and the regulations in this part 28.
(b) U.S. citizen or resident. A U.S. citizen or resident is an individual who is a citizen or resident of the United States for purposes of chapter 11 or 12 of subtitle B, as the case may be, at the time of receipt of the covered gift or covered bequest. Furthermore, references to a U.S. citizen also include a domestic trust, as well as an electing foreign trust. See § 28.2801-1(a).
(c) Domestic trust. The term domestic trust means a trust defined in section 7701(a)(30)(E) of the Code. References to a domestic trust include an electing foreign trust.
(d) Foreign trust—(1) In general. The term foreign trust means a trust defined in section 7701(a)(31)(B).
(2) Electing foreign trust. The term electing foreign trust means a foreign trust that has in effect a valid election to be treated as a domestic trust for purposes of section 2801. See § 28.2801-5(d).
(3) Non-electing foreign trust. The term non-electing foreign trust means any foreign trust other than an electing foreign trust described in paragraph (d)(2) of this section.
(e) U.S. recipient. The term U.S. recipient means a U.S. citizen or resident, a domestic trust, or an electing foreign trust that receives a covered gift or covered bequest, whether directly or indirectly, during the calendar year. The term U.S. recipient includes a U.S. citizen or resident receiving a distribution from a non-electing foreign trust if the distribution is attributable (in whole or in part) to one or more covered gifts or covered bequests received by the non-electing foreign trust. See § 28.2801-5(c) to determine the amount of a distribution attributable to covered gifts and covered bequests. This term also includes the U.S. citizen or resident shareholders, partners, or other interest-holders, as the case may be (if any), of a business entity that receives a covered gift or covered bequest.
(f) Covered bequest. The term covered bequest means any property acquired by a recipient on or after June 17, 2008, directly or indirectly by reason of the death of a covered expatriate, regardless of the situs of the property and of whether such property was acquired by the covered expatriate before or after expatriation from the United States, but only to the extent the property would have been included in the covered expatriate's gross estate for Federal estate tax purposes if the covered expatriate had been a U.S. citizen immediately before death. See paragraph (i) of this section for guidance in determining when property is acquired indirectly for purposes of this paragraph (f). The term covered bequest also includes any other property that would have been included in the covered expatriate's gross estate for Federal estate tax purposes (for example, under section 2035 of the Code) if the covered expatriate had been a U.S. citizen immediately before death, as well as distributions made by reason of the death of a covered expatriate from a non-electing foreign trust to the extent the distributions are attributable to covered gifts and covered bequests made to the non-electing foreign trust on or after June 17, 2008. See § 28.2801-3 for additional rules and exceptions applicable to the term covered bequest.
(g) Covered gift. The term covered gift means any property acquired by a recipient on or after June 17, 2008, by gift directly or indirectly from an individual who is a covered expatriate at the time the property is received by the recipient, regardless of the situs of such property and of whether such property was acquired by the covered expatriate before or after expatriation from the United States. See paragraph (i) of this section for guidance in determining when property is acquired indirectly for purposes of this paragraph (g). The term covered gift also includes distributions made, other than by reason of the death of a covered expatriate, from a non-electing foreign trust to the extent the distributions are attributable to covered gifts and covered bequests made to the non-electing foreign trust on or after June 17, 2008. See § 28.2801-3 for additional rules and exceptions applicable to the term covered gift.
(h) Expatriate and covered expatriate. The term expatriate has the same meaning for purposes of section 2801 as that term has in section 877A(g)(2) of the Code. The term covered expatriate has the same meaning for purposes of section 2801 as that term has in section 877A(g)(1). The determination of whether an individual is a covered expatriate is made as of the expatriation date as defined in section 877A(g)(3), and if an expatriate meets the definition of a covered expatriate, the expatriate is a covered expatriate for purposes of section 2801 at all times after the expatriation date. However, an expatriate is not treated as a covered expatriate for purposes of section 2801 during any period beginning after the expatriation date during which such individual is subject to United States estate or gift tax (chapter 11 or chapter 12 of subtitle B) as a U.S. citizen or resident. See section 877A(g)(1)(C). An individual's status as a covered expatriate will be determined as of the date of the most recent expatriation, if there has been more than one.
(i) Indirect acquisition of property. For purposes of paragraphs (f) and (g) of this section, an indirect acquisition of property means the receipt of an interest in property, gratuitously passed from or conferred by the covered expatriate, by or on behalf of the recipient through another person, or by a trust or entity in which the recipient has an interest, regardless of the means or device employed. Such an indirect acquisition includes but is not limited to—
(1) Property acquired by a recipient through a transfer to a corporation or other entity other than a trust or estate, to the extent of the ownership interest of the recipient in that corporation or other entity;
(2) Money paid or property distributed by a covered expatriate, or distributed from a non-electing foreign trust that received a covered gift or covered bequest, in satisfaction of a debt or liability of the recipient, regardless of the payee of that payment or distribution;
(3) Property acquired by or on behalf of a recipient pursuant to the exercise, release, or lapse (without regard to the exception in section 2041(b)(2) or 2514(e) of the Code) of a non-covered expatriate's power of appointment granted by a covered expatriate over property not in trust, unless the property previously was subjected to section 2801 tax upon the grant of the power or the covered expatriate had no more than a non-general power of appointment over that property; and
(4) Property acquired through or from any person not subject to the section 2801 tax that is, in substance, a covered gift or covered bequest from a covered expatriate.
(j) Power of appointment. The term power of appointment refers to both a general and non-general power of appointment, except as expressly limited to one or the other in a particular provision of the regulations in this part 28. The term general power of appointment has the same meaning as in sections 2041(b)(1) and 2514(c). The term non-general power of appointment means any power of appointment that is not a general power of appointment. For purposes of section 2801, the term power of appointment is defined without regard to the exception in section 2041(b)(2) or 2514(e).
(k) Section 2801 tax. The term section 2801 tax has the meaning provided in § 28.2801-1(a).
(l) Section 2801(c) amount. The term section 2801(c) amount is the dollar amount of the per-donee gift tax exclusion in effect under section 2503(b) for that calendar year.
(m) Statutory references—(1) Code. The term Code means the Internal Revenue Code.
(2) Subtitle B. The term subtitle B means subtitle B of the Code.
(n) Applicability date. This section applies to covered gifts or covered bequests received on or after January 1, 2025.
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Treas. Reg. §28.2801-2(a)Overview.
Overview. This section provides definitions of terms applicable solely for purposes of section 2801 of the Code and the regulations in this part 28.
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Treas. Reg. §28.2801-2(b)U.
U.S. citizen or resident. A U.S. citizen or resident is an individual who is a citizen or resident of the United States for purposes of chapter 11 or 12 of subtitle B, as the case may be, at the time of receipt of the covered gift or covered bequest. Furthermore, references to a U.S. citizen also include a domestic trust, as well as an electing foreign trust. See § 28.2801-1(a).
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Treas. Reg. §28.2801-2(c)Domestic trust.
Domestic trust. The term domestic trust means a trust defined in section 7701(a)(30)(E) of the Code. References to a domestic trust include an electing foreign trust.
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Treas. Reg. §28.2801-2(d)Foreign trust—(1) In general.
Foreign trust—(1) In general. The term foreign trust means a trust defined in section 7701(a)(31)(B).
(2) Electing foreign trust. The term electing foreign trust means a foreign trust that has in effect a valid election to be treated as a domestic trust for purposes of section 2801. See § 28.2801-5(d).
(3) Non-electing foreign trust. The term non-electing foreign trust means any foreign trust other than an electing foreign trust described in paragraph (d)(2) of this section.
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Treas. Reg. §28.2801-2(e)U.
U.S. recipient. The term U.S. recipient means a U.S. citizen or resident, a domestic trust, or an electing foreign trust that receives a covered gift or covered bequest, whether directly or indirectly, during the calendar year. The term U.S. recipient includes a U.S. citizen or resident receiving a distribution from a non-electing foreign trust if the distribution is attributable (in whole or in part) to one or more covered gifts or covered bequests received by the non-electing foreign trust. See § 28.2801-5(c) to determine the amount of a distribution attributable to covered gifts and covered bequests. This term also includes the U.S. citizen or resident shareholders, partners, or other interest-holders, as the case may be (if any), of a business entity that receives a covered gift or covered bequest.
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Treas. Reg. §28.2801-2(f)Covered bequest.
Covered bequest. The term covered bequest means any property acquired by a recipient on or after June 17, 2008, directly or indirectly by reason of the death of a covered expatriate, regardless of the situs of the property and of whether such property was acquired by the covered expatriate before or after expatriation from the United States, but only to the extent the property would have been included in the covered expatriate's gross estate for Federal estate tax purposes if the covered expatriate had been a U.S. citizen immediately before death. See paragraph (i) of this section for guidance in determining when property is acquired indirectly for purposes of this paragraph (f). The term covered bequest also includes any other property that would have been included in the covered expatriate's gross estate for Federal estate tax purposes (for example, under section 2035 of the Code) if the covered expatriate had been a U.S. citizen immediately before death, as well as distributions made by reason of the death of a covered expatriate from a non-electing foreign trust to the extent the distributions are attributable to covered gifts and covered bequests made to the non-electing foreign trust on or after June 17, 2008. See § 28.2801-3 for additional rules and exceptions applicable to the term covered bequest.