1996 US Code
Title 26 - INTERNAL REVENUE CODE
CHAPTER 5 - TAX ON TRANSFERS TO AVOID INCOME TAX
Sec. 1491 - Imposition of tax

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§1491. Imposition of tax

There is hereby imposed on the transfer of property by a citizen or resident of the United States, or by a domestic corporation or partnership, or by an estate or trust which is not a foreign estate or trust, to a foreign corporation as paid-in surplus or as a contribution to capital, or to a foreign estate or trust, or to a foreign partnership, an excise tax equal to 35 percent of the excess of—

(1) the fair market value of the property so transferred, over

(2) the sum of—

(A) the adjusted basis (for determining gain) of such property in the hands of the transferor, plus

(B) the amount of the gain recognized to the transferor at the time of the transfer.

If a trust which is not a foreign trust becomes a foreign trust, such trust shall be treated for purposes of this section as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust.

(Aug. 16, 1954, ch. 736, 68A Stat. 365; Oct. 4, 1976, Pub. L. 94–455, title X, §1015(a), 90 Stat. 1617; Nov. 6, 1978, Pub. L. 95–600, title VII, §701(u)(14)(A), 92 Stat. 2919; Aug. 20, 1996, Pub. L. 104–188, title I, §1907(b)(1), 110 Stat. 1916.)

Amendments

1996—Pub. L. 104–188 inserted at end “If a trust which is not a foreign trust becomes a foreign trust, such trust shall be treated for purposes of this section as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust.”

1978—Pub. L. 95–600 substituted “estate or trust” for “trust” wherever appearing.

1976—Pub. L. 94–455 substituted in provisions preceding par. (1) “property” for “stocks and securities” and “35 percent” for “271/2 percent” and in par. (1) “fair market value” for “value” and “property” for “stocks and securities” and in par. (2) designated existing provisions as subpar. (A) and added subpar. (B).

Effective Date of 1996 Amendment

Section 1907(b)(2) of Pub. L. 104–188 provided that: “The amendment made by this subsection [amending this section] shall take effect on the date of the enactment of this Act [Aug. 20, 1996].”

Effective Date of 1978 Amendment

Section 701(u)(14)(C) of Pub. L. 95–600 provided that: “The amendments made by this paragraph [amending this section and section 1492 of this title] shall apply to transfers after October 2, 1975.”

Effective Date of 1976 Amendment

Section 1015(d) of Pub. L. 94–455 provided that: “The amendments made by this section [enacting section 1057 of this title, amending this section and section 1492 of this title, and renumbering former section 1057 as 1058 of this title] shall apply to transfers of property after October 2, 1975.”

Foreign Trusts: Transitional Rule

Section 1904(e) of Pub. L. 104–188 provided that: “If—

“(1) by reason of the amendments made by this section [amending sections 643, 665, 672, and 901 of this title], any person other than a United States person ceases to be treated as the owner of a portion of a domestic trust, and

“(2) before January 1, 1997, such trust becomes a foreign trust, or the assets of such trust are transferred to a foreign trust,

no tax shall be imposed by section 1491 of the Internal Revenue Code of 1986 by reason of such trust becoming a foreign trust or the assets of such trust being transferred to a foreign trust.”

Section Referred to in Other Sections

This section is referred to in sections 814, 1492, 1494 of this title.