US Laws, Codes, Statutes & Cases

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[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 26USC2001]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                    Subtitle B--Estate and Gift Taxes
 
                         CHAPTER 11--ESTATE TAX
 
             Subchapter A--Estates of Citizens or Residents
 
                           PART I--TAX IMPOSED
 
Sec. 2001. Imposition and rate of tax


(a) Imposition

    A tax is hereby imposed on the transfer of the taxable estate of 
every decedent who is a citizen or resident of the United States.

(b) Computation of tax

    The tax imposed by this section shall be the amount equal to the 
excess (if any) of--
        (1) a tentative tax computed under subsection (c) on the sum 
    of--
            (A) the amount of the taxable estate, and
            (B) the amount of the adjusted taxable gifts, over

        (2) the aggregate amount of tax which would have been payable 
    under chapter 12 with respect to gifts made by the decedent after 
    December 31, 1976, if the provisions of subsection (c) (as in effect 
    at the decedent's death) had been applicable at the time of such 
    gifts.

For purposes of paragraph (1)(B), the term ``adjusted taxable gifts'' 
means the total amount of the taxable gifts (within the meaning of 
section 2503) made by the decedent after December 31, 1976, other than 
gifts which are includible in the gross estate of the decedent.

(c) Rate schedule

                           (1) In general


If the amount with   respect to
which the   tentative tax to be           The tentative tax is:
           computed is:

Not over $10,000...............  18 percent of such amount.
Over $10,000 but not over        $1,800, plus 20 percent of the excess
 $20,000.                         of such amount over $10,000.
Over $20,000 but not over        $3,800, plus 22 percent of the excess
 $40,000.                         of such amount over $20,000.
Over $40,000 but not over        $8,200 plus 24 percent of the excess of
 $60,000.                         such amount over $40,000.
Over $60,000 but not over        $13,000, plus 26 percent of the excess
 $80,000.                         of such amount over $60,000.
Over $80,000 but not over        $18,200, plus 28 percent of the excess
 $100,000.                        of such amount over $80,000.
Over $100,000 but not over       $23,800, plus 30 percent of the excess
 $150,000.                        of such amount over $100,000.
Over $150,000 but not over       $38,800, plus 32 percent of the excess
 $250,000.                        of such amount over $150,000.
Over $250,000 but not over       $70,800, plus 34 percent of the excess
 $500,000.                        of such amount over $250,000.
Over $500,000 but not over       $155,800, plus 37 percent of the excess
 $750,000.                        of such amount over $500,000.
Over $750,000 but not over       $248,300, plus 39 percent of the excess
 $1,000,000.                      of such amount over $750,000.
Over $1,000,000 but not over     $345,800, plus 41 percent of the excess
 $1,250,000.                      of such amount over $1,000,000.
Over $1,250,000 but not over     $448,300, plus 43 percent of the excess
 $1,500,000.                      of such amount over $1,250,000.
Over $1,500,000 but not over     $555,800, plus 45 percent of the excess
 $2,000,000.                      of such amount over $1,500,000.
Over $2,000,000 but not over     $780,800, plus 49 percent of the excess
 $2,500,000.                      of such amount over $2,000,000.
Over $2,500,000................  $1,025,800, plus 50% of the excess over
                                  $2,500,000.


                (2) Phasedown of maximum rate of tax

        (A) In general

            In the case of estates of decedents dying, and gifts made, 
        in calendar years after 2002 and before 2010, the tentative tax 
        under this subsection shall be determined by using a table 
        prescribed by the Secretary (in lieu of using the table 
        contained in paragraph (1)) which is the same as such table; 
        except that--
                (i) the maximum rate of tax for any calendar year shall 
            be determined in the table under subparagraph (B), and
                (ii) the brackets and the amounts setting forth the tax 
            shall be adjusted to the extent necessary to reflect the 
            adjustments under subparagraph (A).

        (B) Maximum rate

                                                             The maximum
In calendar year:                                               rate is:
                2003............................             49 percent 
                2004............................             48 percent 
                2005............................             47 percent 
                2006............................             46 percent 
                2007, 2008, and 2009............             45 percent.

(d) Adjustment for gift tax paid by spouse

    For purposes of subsection (b)(2), if--
        (1) the decedent was the donor of any gift one-half of which was 
    considered under section 2513 as made by the decedent's spouse, and
        (2) the amount of such gift is includible in the gross estate of 
    the decedent,

any tax payable by the spouse under chapter 12 on such gift (as 
determined under section 2012(d)) shall be treated as a tax payable with 
respect to a gift made by the decedent.

(e) Coordination of sections 2513 and 2035

    If--
        (1) the decedent's spouse was the donor of any gift one-half of 
    which was considered under section 2513 as made by the decedent, and
        (2) the amount of such gift is includible in the gross estate of 
    the decedent's spouse by reason of section 2035,

such gift shall not be included in the adjusted taxable gifts of the 
decedent for purposes of subsection (b)(1)(B), and the aggregate amount 
determined under subsection (b)(2) shall be reduced by the amount (if 
any) determined under subsection (d) which was treated as a tax payable 
by the decedent's spouse with respect to such gift.

(f) Valuation of gifts

                           (1) In general

        If the time has expired under section 6501 within which a tax 
    may be assessed under chapter 12 (or under corresponding provisions 
    of prior laws) on--
            (A) the transfer of property by gift made during a preceding 
        calendar period (as defined in section 2502(b)); or
            (B) an increase in taxable gifts required under section 
        2701(d),

    the value thereof shall, for purposes of computing the tax under 
    this chapter, be the value as finally determined for purposes of 
    chapter 12.

                       (2) Final determination

        For purposes of paragraph (1), a value shall be treated as 
    finally determined for purposes of chapter 12 if--
            (A) the value is shown on a return under such chapter and 
        such value is not contested by the Secretary before the 
        expiration of the time referred to in paragraph (1) with respect 
        to such return;
            (B) in a case not described in subparagraph (A), the value 
        is specified by the Secretary and such value is not timely 
        contested by the taxpayer; or
            (C) the value is determined by a court or pursuant to a 
        settlement agreement with the Secretary.

    For purposes of subparagraph (A), the value of an item shall be 
    treated as shown on a return if the item is disclosed in the return, 
    or in a statement attached to the return, in a manner adequate to 
    apprise the Secretary of the nature of such item.

(Aug. 16, 1954, ch. 736, 68A Stat. 373; Pub. L. 94-455, title XX, 
Sec. 2001(a)(1), Oct. 4, 1976, 90 Stat. 1846; Pub. L. 95-600, title VII, 
Sec. 702(h)(1), Nov. 6, 1978, 92 Stat. 2930; Pub. L. 97-34, title IV, 
Sec. 402(a)-(c), Aug. 13, 1981, 95 Stat. 300; Pub. L. 98-369, div. A, 
title I, Sec. 21(a), July 18, 1984, 98 Stat. 506; Pub. L. 100-203, title 
X, Sec. 10401(a)-(b)(2)(A), Dec. 22, 1987, 101 Stat. 1330-430, 1330-431; 
Pub. L. 103-66, title XIII, Sec. 13208(a)-(b)(2), Aug. 10, 1993, 107 
Stat. 469; Pub. L. 105-34, title V, Secs. 501(a)(1)(D), 506(a), Aug. 5, 
1997, 111 Stat. 845, 855; Pub. L. 105-206, title VI, Sec. 6007(e)(2)(B), 
July 22, 1998, 112 Stat. 810; Pub. L. 105-277, div. J, title IV, 
Sec. 4003(c), Oct. 21, 1998, 112 Stat. 2681-909; Pub. L. 107-16, title 
V, Sec. 511(a)-(c), June 7, 2001, 115 Stat. 70.)

                          Amendment of Section

        For termination of amendment by section 901 of Pub. L. 107-16, 
    see Effective and Termination Dates of 2001 Amendment note below.


                               Amendments

    2001--Subsec. (c)(1). Pub. L. 107-16, Secs. 511(a), 901, temporarily 
substituted in table provisions that if the amount on which the tax is 
computed is over $2,500,000, then the tentative tax is $1,025,800, plus 
50% of the excess over $2,500,000 for provisions that if the amount on 
which the tax is computed is over $2,500,000 but not over $3,000,000, 
then the tentative tax is $1,025,800, plus 53% of the excess over 
$2,500,000, and if the amount on which the tax is computed is over 
$3,000,000, then the tentative tax is $1,290,800, plus 55% of the excess 
over $3,000,000. See Effective and Termination Dates of 2001 Amendment 
note below.
    Subsec. (c)(2). Pub. L. 107-16, Secs. 511(c), 901, temporarily added 
par. (2). See Effective and Termination Dates of 2001 Amendment note 
below.
    Pub. L. 107-16, Secs. 511(b), 901, temporarily struck out heading 
and text of par. (2). Text read as follows: ``The tentative tax 
determined under paragraph (1) shall be increased by an amount equal to 
5 percent of so much of the amount (with respect to which the tentative 
tax is to be computed) as exceeds $10,000,000 but does not exceed the 
amount at which the average tax rate under this section is 55 percent.'' 
See Effective and Termination Dates of 2001 Amendment note below.
    1998--Subsec. (f). Pub. L. 105-206, Sec. 6007(e)(2)(B), reenacted 
heading without change and amended text generally. Prior to amendment, 
text read as follows: ``If--
        ``(1) the time has expired within which a tax may be assessed 
    under chapter 12 (or under corresponding provisions of prior laws) 
    on the transfer of property by gift made during a preceding calendar 
    period (as defined in section 2502(b)), and
        ``(2) the value of such gift is shown on the return for such 
    preceding calendar period or is disclosed in such return, or in a 
    statement attached to the return, in a manner adequate to apprise 
    the Secretary of the nature of such gift,
the value of such gift shall, for purposes of computing the tax under 
this chapter, be the value of such gift as finally determined for 
purposes of chapter 12.''
    Subsec. (f)(2). Pub. L. 105-277 inserted concluding provisions.
    1997--Subsec. (c)(2). Pub. L. 105-34, Sec. 501(a)(1)(D), substituted 
``the amount at which the average tax rate under this section is 55 
percent'' for ``$21,040,000''.
    Subsec. (f). Pub. L. 105-34, Sec. 506(a), added subsec. (f).
    1993--Subsec. (c)(1). Pub. L. 103-66, Sec. 13208(a), substituted in 
table provisions that if the amount on which the tax is computed is over 
$2,500,000 but not over $3,000,000, then the tentative tax is 
$1,025,800, plus 53% of the excess over $2,500,000 and if the amount on 
which the tax is computed is over $3,000,000, then the tentative tax is 
$1,290,800, plus 55% of the excess over $3,000,000 for provisions that 
if the amount on which the tax is computed is over $2,500,000, then the 
tentative tax is $1,025,800, plus 50% of the excess over $2,500,000.
    Subsec. (c)(2), (3). Pub. L. 103-66, Sec. 13208(b)(1), (2), 
redesignated par. (3) as (2), struck out ``($18,340,000 in the case of 
decedents dying, and gifts made, after 1992)'' after ``exceed 
$21,040,000'', and struck out former par. (2) which related to the rates 
of tax on estates under this section for the years 1982 to 1992.
    1987--Subsec. (b)(1). Pub. L. 100-203, Sec. 10401(b)(2)(A)(i), 
substituted ``under subsection (c)'' for ``in accordance with the rate 
schedule set forth in subsection (c)''.
    Subsec. (b)(2). Pub. L. 100-203, Sec. 10401(b)(2)(A)(ii), 
substituted ``the provisions of subsec. (c)'' for ``the rate schedule 
set forth in subsection (c)''.
    Subsec. (c)(2)(A). Pub. L. 100-203, Sec. 10401(a)(1), substituted 
``1993'' for ``1988''.
    Subsec. (c)(2)(D). Pub. L. 100-203, Sec. 10401(a)(2), (3), 
substituted in heading ``After 1983 and before 1993'' for ``For 1984, 
1985, 1986, or 1987'', and in text ``after 1983 and before 1993'' for 
``in 1984, 1985, 1986, or 1987''.
    Subsec. (c)(3). Pub. L. 100-203, Sec. 10401(b)(1), added par. (3).
    1984--Subsec. (c)(2)(A), (D). Pub. L. 98-369 substituted ``1988'' 
for ``1985'' in subpar. (A) and substituted ``1984, 1985, 1986, or 
1987'' for ``1984'' in heading and text of subpar. (D).
    1981--Subsec. (b)(2). Pub. L. 97-34, Sec. 402(c), inserted ``which 
would have been'' before ``payable'' and ``, if the rate schedule set 
forth in subsection (c) (as in effect at the decedent's death) had been 
applicable at the time of such gifts'' after ``December 31, 1976,''.
    Subsec. (c). Pub. L. 97-34, Sec. 402(a), (b)(1), designated existing 
provision as par. (1), inserted heading ``In general'' and substituted 
in table provision that if the amount computed is over $2,500,000 then 
the tentative tax is $1,025,800 plus 50% of the excess over $2,500,000 
for provisions that if the amount computed is over $2,500,000 but not 
over $3,000,000, then the tentative tax is $1,025,800 plus 53% of the 
excess over $2,500,000, over $3,000,000 but not over $3,500,000 then the 
tentative tax is $1,290,000 plus 57% of the excess over $3,000,000, over 
$3,500,000 but not over $4,000,000 then the tentative tax is $1,575,800 
plus 61% of the excess over $3,500,000, over $4,000,000 but not over 
$4,500,000 then the tentative tax is $1,880,800 plus 65% of the excess 
over $4,000,000, over $4,500,000 but not over $5,000,000 then the 
tentative tax is $2,205,800 plus 69% of the excess over $4,500,000, over 
$5,000,000 then the tentative tax is $2,550,800 plus 70% of the excess 
over $5,000,000, and added par. (2).
    1978--Subsec. (e). Pub. L. 95-600 added subsec. (e).
    1976--Pub. L. 94-455 substituted provisions setting a unified rate 
schedule for estate and gift taxes ranging from 18 percent for the first 
$10,000 in taxable transfers to 70 percent of taxable transfers in 
excess of $5,000,000, with provision for adjustments for gift taxes paid 
by spouses, for provisions setting an estate tax of 3 percent of the 
first $5,000 of the taxable estate to 77 percent of the taxable estate 
in excess of $10,000,000.


            Effective and Termination Dates of 2001 Amendment

    Pub. L. 107-16, title V, Sec. 511(f)(1), (2), June 7, 2001, 115 
Stat. 71, provided that:
    ``(1) Subsections (a) and (b).--The amendments made by subsections 
(a) and (b) [amending this section] shall apply to estates of decedents 
dying, and gifts made, after December 31, 2001.
    ``(2) Subsection (c).--The amendment made by subsection (c) 
[amending this section] shall apply to estates of decedents dying, and 
gifts made, after December 31, 2002.''
    Amendment by Pub. L. 107-16 inapplicable to estates of decedents 
dying, gifts made, or generation skipping transfers, after Dec. 31, 
2010, and the Internal Revenue Code of 1986 to be applied and 
administered to such estates, gifts, and transfers as if such amendment 
had never been enacted, see section 901 of Pub. L. 107-16, set out as a 
note under section 1 of this title.


                    Effective Date of 1998 Amendments

    Amendment by Pub. L. 105-277 effective as if included in the 
provision of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which 
such amendment relates, see section 4003(l) of Pub. L. 105-277, set out 
as a note under section 86 of this title.
    Amendment by Pub. L. 105-206 effective, except as otherwise 
provided, as if included in the provisions of the Taxpayer Relief Act of 
1997, Pub. L. 105-34, to which such amendment relates, see section 6024 
of Pub. L. 105-206, set out as a note under section 1 of this title.


                    Effective Date of 1997 Amendment

    Section 501(f) of Pub. L. 105-34, as amended by Pub. L. 105-206, 
title VI, Sec. 6007(a)(2), July 22, 1998, 112 Stat. 807, provided that: 
``The amendments made by this section [amending this section and 
sections 2010, 2032A, 2102, 2503, 2505, 2631, 6018, and 6601 of this 
title] (other than the amendment made by subsection (d) [amending 
section 2631 of this title]) shall apply to the estates of decedents 
dying, and gifts made, after December 31, 1997.''
    Section 506(e)(1) of Pub. L. 105-34, as amended by Pub. L. 105-206, 
title VI, Sec. 6007(e)(1), July 22, 1998, 112 Stat. 809, provided that: 
``The amendments made by subsections (a), (c), and (d) [enacting section 
7477 of this title and amending this section and section 2504 of this 
title] shall apply to gifts made after the date of the enactment of this 
Act [Aug. 5, 1997].''


                    Effective Date of 1993 Amendment

    Section 13208(c) of Pub. L. 103-66 provided that: ``The amendments 
made by this section [amending this section and section 2101 of this 
title] shall apply in the case of decedents dying and gifts made after 
December 31, 1992.''


                    Effective Date of 1987 Amendment

    Section 10401(c) of Pub. L. 100-203 provided that: ``The amendments 
made by this section [amending this section and section 2502 of this 
title] shall apply in the case of decedents dying, and gifts made, after 
December 31, 1987.''


                    Effective Date of 1984 Amendment

    Section 21(b) of Pub. L. 98-369 provided that: ``The amendments made 
by subsection (a) [amending this section] shall apply to the estates of 
decedents dying after, and gifts made after, December 31, 1983.''


                    Effective Date of 1981 Amendment

    Section 402(d) of Pub. L. 97-34 provided that: ``The amendments made 
by this section [amending this section] shall apply to estates of 
decedents dying after, and gifts made after, December 31, 1981.''


                    Effective Date of 1978 Amendment

    Section 702(h)(3) of Pub. L. 95-600 provided that: ``The amendments 
made by this subsection [amending this section and section 2602 of this 
title] shall apply with respect to the estates of decedents dying after 
December 31, 1976, except that such amendments shall not apply to 
transfers made before January 1, 1977.''


                    Effective Date of 1976 Amendment

    Section 2001(d)(1) of Pub. L. 94-455 provided that: ``The amendments 
made by subsections (a) [enacting section 2010, amending this section 
and sections 2012 and 2035, and repealing section 2052 of this title] 
and (c)(1) [amending sections 2011, 2012, 2013, 2014, 2038, 2044, 2101, 
2102, 2104, 2106, 2107, 2206, 2207, and 6018 of this title] shall apply 
to the estates of decedents dying after December 31, 1976; except that 
the amendments made by subsection (a)(5) [amending section 2035 of this 
title] and subparagraphs (K) and (L) of subsection (c)(1) [amending 
sections 2038 and 2104 of this title] shall not apply to transfers made 
before January 1, 1977.''


                               Short Title

    Pub. L. 91-614, Sec. 1(a), Dec. 31, 1970, 84 Stat. 1836, provided 
that: ``This Act [enacting section 6905 of this title, section 1232a of 
Title 15, Commerce and Trade, and section 1033 of former Title 31, Money 
and Finance, amending sections 56, 1015, 1223, 2012, 2032, 2055, 2204, 
2501, 2502, 2503, 2504, 2512, 2513, 2515, 2521, 2522, 2523, 4061, 4063, 
4216, 4251, 4491, 6019, 6040, 6075, 6091, 6161, 6212, 6214, 6324, 6412, 
6416, 6501, 6504, and 6512 of this title, and enacting provisions set 
out as notes under sections 56, 2032, 2204, 2501, 4063, 4216, 4251, 
4491, and 6905 of this title] may be cited as the `Excise, Estate, and 
Gift Tax Adjustment Act of 1970'.''


Clarification of Treatment of Certain Exemptions for Purposes of Federal 
                          Estate and Gift Taxes

    Section 641 of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, 
Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(a) General Rule.--Nothing in any provision of law exempting any 
property (or interest therein) from taxation shall exempt the transfer 
of such property (or interest therein) from Federal estate, gift, and 
generation-skipping transfer taxes. In the case of any provision of law 
enacted after the date of the enactment of this Act [July 18, 1984], 
such provision shall not be treated as exempting the transfer of 
property from Federal estate, gift, and generation-skipping transfer 
taxes unless it refers to the appropriate provisions of the Internal 
Revenue Code of 1986 [formerly I.R.C. 1954].
    ``(b) Effective Date.--
        ``(1) In general.--The provisions of subsection (a) shall apply 
    to the estates of decedents dying, gifts made, and transfers made on 
    or after June 19, 1984.
        ``(2) Treatment of certain transfers treated as taxable.--The 
    provisions of subsection (a) shall also apply in the case of any 
    transfer of property (or interest therein) if at any time there was 
    filed an estate or gift tax return showing such transfer as subject 
    to Federal estate or gift tax.
        ``(3) No inference.--No inference shall arise from paragraphs 
    (1) and (2) that any transfer of property (or interest therein) 
    before June 19, 1984, is exempt from Federal estate and gift 
    taxes.''


             Reports With Transfers of Public Housing Bonds

    Section 642 of Pub. L. 98-369 provided that:
    ``(a) General Rule.--With respect to transfers of public housing 
bonds occurring after December 31, 1983, and before June 19, 1984, the 
taxpayer shall report the date and amount of such transfer and such 
other information as the Secretary of the Treasury or his delegate shall 
prescribe by regulations to allow the determination of the tax and 
interest due if it is ultimately determined that such transfers are 
subject to estate, gift, or generation-skipping tax.
    ``(b) Penalty for Failure to Report.--Any taxpayer failing to 
provide the information required by subsection (a) shall be liable for a 
penalty equal to 25 percent of the excess of (1) the estate, gift, or 
generation-skipping tax that is payable assuming that such transfers are 
subject to tax, over (2) the tax payable assuming such transfers are not 
so subject.''

                  Section Referred to in Other Sections

    This section is referred to in sections 163, 691, 1016, 2010, 2011, 
2012, 2013, 2014, 2015, 2031, 2032A, 2051, 2053, 2054, 2055, 2056, 
2056A, 2057, 2058, 2101, 2107, 2201, 2502, 2504, 2641, 2642, 2661, 6018, 
6019, 6166, 6601, 7422, 7481 of this title.