Internal Revenue Code:Sec. 2056A. Qualified domestic trust
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle B - Estate and Gift Taxes
CHAPTER 11 - ESTATE TAX
Subchapter A - Estates of Citizens or Residents
PART IV - TAXABLE ESTATE
Statute
Sec. 2056A. Qualified domestic trust
(a) Qualified domestic trust defined
For purposes of this section and section 2056(d), the term
''qualified domestic trust'' means, with respect to any decedent,
any trust if -
(1) the trust instrument -
(A) except as provided in regulations prescribed by the
Secretary, requires that at least 1 trustee of the trust be an
individual citizen of the United States or a domestic
corporation, and
(B) provides that no distribution (other than a distribution
of income) may be made from the trust unless a trustee who is
an individual citizen of the United States or a domestic
corporation has the right to withhold from such distribution
the tax imposed by this section on such distribution,
(2) such trust meets such requirements as the Secretary may by
regulations prescribe to ensure the collection of any tax imposed
by subsection (b), and
(3) an election under this section by the executor of the
decedent applies to such trust.
(b) Tax treatment of trust
(1) Imposition of estate tax
There is hereby imposed an estate tax on -
(A) any distribution before the date of the death of the
surviving spouse from a qualified domestic trust, and
(B) the value of the property remaining in a qualified
domestic trust on the date of the death of the surviving
spouse.
(2) Amount of tax
(A) In general
In the case of any taxable event, the amount of the estate
tax imposed by paragraph (1) shall be the amount equal to -
(i) the tax which would have been imposed under section
2001 on the estate of the decedent if the taxable estate of
the decedent had been increased by the sum of -
(I) the amount involved in such taxable event, plus
(II) the aggregate amount involved in previous taxable
events with respect to qualified domestic trusts of such
decedent, reduced by
(ii) the tax which would have been imposed under section
2001 on the estate of the decedent if the taxable estate of
the decedent had been increased by the amount referred to in
clause (i)(II).
(B) Tentative tax where tax of decedent not finally determined
(i) In general
If the tax imposed on the estate of the decedent under
section 2001 is not finally determined before the taxable
event, the amount of the tax imposed by paragraph (1) on such
event shall be determined by using the highest rate of tax in
effect under section 2001 as of the date of the decedent's
death.
(ii) Refund of excess when tax finally determined
If -
(I) the amount of the tax determined under clause (i),
exceeds
(II) the tax determined under subparagraph (A) on the
basis of the final determination of the tax imposed by
section 2001 on the estate of the decedent,
such excess shall be allowed as a credit or refund (with
interest) if claim therefor is filed not later than 1 year
after the date of such final determination.
(C) Special rule where decedent has more than 1 qualified
domestic trust
If there is more than 1 qualified domestic trust with respect
to any decedent, the amount of the tax imposed by paragraph (1)
with respect to such trusts shall be determined by using the
highest rate of tax in effect under section 2001 as of the date
of the decedent's death (and the provisions of paragraph (3)(B)
shall not apply) unless, pursuant to a designation made by the
decedent's executor, there is 1 person -
(i) who is an individual citizen of the United States or a
domestic corporation and is responsible for filing all
returns of tax imposed under paragraph (1) with respect to
such trusts and for paying all tax so imposed, and
(ii) who meets such requirements as the Secretary may by
regulations prescribe.
(3) Certain lifetime distributions exempt from tax
(A) Income distributions
No tax shall be imposed by paragraph (1)(A) on any
distribution of income to the surviving spouse.
(B) Hardship exemption
No tax shall be imposed by paragraph (1)(A) on any
distribution to the surviving spouse on account of hardship.
(4) Tax where trust ceases to qualify
If any qualified domestic trust ceases to meet the requirements
of paragraphs (1) and (2) of subsection (a), the tax imposed by
paragraph (1) shall apply as if the surviving spouse died on the
date of such cessation.
(5) Due date
(A) Tax on distributions
The estate tax imposed by paragraph (1)(A) shall be due and
payable on the 15th day of the 4th month following the calendar
year in which the taxable event occurs; except that the estate
tax imposed by paragraph (1)(A) on distributions during the
calendar year in which the surviving spouse dies shall be due
and payable not later than the date on which the estate tax
imposed by paragraph (1)(B) is due and payable.
(B) Tax at death of spouse
The estate tax imposed by paragraph (1)(B) shall be due and
payable on the date 9 months after the date of such death.
(6) Liability for tax
Each trustee shall be personally liable for the amount of the
tax imposed by paragraph (1). Rules similar to the rules of
section 2204 shall apply for purposes of the preceding sentence.
(7) Treatment of tax
For purposes of section 2056(d), any tax paid under paragraph
(1) shall be treated as a tax paid under section 2001 with
respect to the estate of the decedent.
(8) Lien for tax
For purposes of section 6324, any tax imposed by paragraph (1)
shall be treated as an estate tax imposed under this chapter with
respect to a decedent dying on the date of the taxable event (and
the property involved shall be treated as the gross estate of
such decedent).
(9) Taxable event
The term ''taxable event'' means the event resulting in tax
being imposed under paragraph (1).
(10) Certain benefits allowed
(A) In general
If any property remaining in the qualified domestic trust on
the date of the death of the surviving spouse is includible in
the gross estate of such spouse for purposes of this chapter
(or would be includible if such spouse were a citizen or
resident of the United States), any benefit which is allowable
(or would be allowable if such spouse were a citizen or
resident of the United States) with respect to such property to
the estate of such spouse under section 2011, 2014, 2032,
2032A, 2055, 2056, or 6166 shall be allowed for purposes of the
tax imposed by paragraph (1)(B).
(B) Section 303
If the estate of the surviving spouse meets the requirements
of section 303 with respect to any property described in
subparagraph (A), for purposes of section 303, the tax imposed
by paragraph (1)(B) with respect to such property shall be
treated as a Federal estate tax payable with respect to the
estate of the surviving spouse.
(C) Section 6161(a)(2)
The provisions of section 6161(a)(2) shall apply with respect
to the tax imposed by paragraph (1)(B), and the reference in
such section to the executor shall be treated as a reference to
the trustees of the trust.
(11) Special rule where distribution tax paid out of trust
For purposes of this subsection, if any portion of the tax
imposed by paragraph (1)(A) with respect to any distribution is
paid out of the trust, an amount equal to the portion so paid
shall be treated as a distribution described in paragraph (1)(A).
(12) Special rule where spouse becomes citizen
If the surviving spouse of the decedent becomes a citizen of
the United States and if -
(A) such spouse was a resident of the United States at all
times after the date of the death of the decedent and before
such spouse becomes a citizen of the United States,
(B) no tax was imposed by paragraph (1)(A) with respect to
any distribution before such spouse becomes such a citizen, or
(C) such spouse elects -
(i) to treat any distribution on which tax was imposed by
paragraph (1)(A) as a taxable gift made by such spouse for
purposes of -
(I) section 2001, and
(II) determining the amount of the tax imposed by section
2501 on actual taxable gifts made by such spouse during the
year in which the spouse becomes a citizen or any
subsequent year, and
(ii) to treat any reduction in the tax imposed by paragraph
(1)(A) by reason of the credit allowable under section 2010
with respect to the decedent as a credit allowable to such
surviving spouse under section 2505 for purposes of
determining the amount of the credit allowable under section
2505 with respect to taxable gifts made by the surviving
spouse during the year in which the spouse becomes a citizen
or any subsequent year,
paragraph (1)(A) shall not apply to any distributions after
such spouse becomes such a citizen (and paragraph (1)(B) shall
not apply).
(13) Coordination with section 1015
For purposes of section 1015, any distribution on which tax is
imposed by paragraph (1)(A) shall be treated as a transfer by
gift, and any tax paid under paragraph (1)(A) shall be treated as
a gift tax.
(14) Coordination with terminable interest rules
Any interest in a qualified domestic trust shall not be treated
as failing to meet the requirements of paragraph (5) or (7) of
section 2056(b) merely by reason of any provision of the trust
instrument permitting the withholding from any distribution of an
amount to pay the tax imposed by paragraph (1) on such
distribution.
(15) No tax on certain distributions
No tax shall be imposed by paragraph (1) on any distribution to
the surviving spouse to the extent such distribution is to
reimburse such surviving spouse for any tax imposed by subtitle A
on any item of income of the trust to which such surviving spouse
is not entitled under the terms of the trust.
(c) Definitions
For purposes of this section -
(1) Property includes interest therein
The term ''property'' includes an interest in property.
(2) Income
Except as provided in regulations, the term ''income'' has the
meaning given to such term by section 643(b).
(3) Trust
To the extent provided in regulations prescribed by the
Secretary, the term ''trust'' includes other arrangements which
have substantially the same effect as a trust.
(d) Election
An election under this section with respect to any trust shall be
made by the executor on the return of the tax imposed by section
2001. Such an election, once made, shall be irrevocable. No
election may be made under this section on any return if such
return is filed more than one year after the time prescribed by law
(including extensions) for filing such return.
(e) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section,
including regulations under which there may be treated as a
qualified domestic trust any annuity or other payment which is
includible in the decedent's gross estate and is by its terms
payable for life or a term of years.
Sources
(Added Pub. L. 100-647, title V, Sec. 5033(a)(2), Nov. 10, 1988,
102 Stat. 3670; amended Pub. L. 101-239, title VII, Sec.
7815(d)(7), (9)-(13), (15), Dec. 19, 1989, 103 Stat. 2415-2418;
Pub. L. 101-508, title XI, Sec. 11702(g)(2)(A), (B), (3)(A), (4),
11704(a)(15), Nov. 5, 1990, 104 Stat. 1388-515, 1388-516, 1388-518;
Pub. L. 105-34, title XIII, Sec. 1312(a), 1314(a), Aug. 5, 1997,
111 Stat. 1044, 1045; Pub. L. 107-16, title V, Sec. 532(c)(6), June
7, 2001, 115 Stat. 74.)
Amendment of Section
AMENDMENT OF SUBSECTION (B)(10)(A)
Pub. L. 107-16, title V, Sec. 532(c)(6), (d), title IX, Sec.
901, June 7, 2001, 115 Stat. 74, 75, 150, provided that,
applicable to estates of decedents dying, and generation-skipping
transfers, after Dec. 31, 2004, subsection (b)(10)(A) of this
section is temporarily amended -
(1) by striking out ''2011,'' before ''2014,'', and
(2) by inserting ''2058,'' after ''2056,''.
See Effective and Termination Dates of 2001 Amendment note
below.
Miscellaneous
AMENDMENTS
1997 - Subsec. (a)(1)(A). Pub. L. 105-34, Sec. 1314(a), inserted
''except as provided in regulations prescribed by the Secretary,''
before ''requires''.
Subsec. (c)(3). Pub. L. 105-34, Sec. 1312(a), added par. (3).
1990 - Subsec. (a)(1). Pub. L. 101-508, Sec. 11702(g)(2)(A),
amended par. (1) generally. Prior to amendment, par. (1) read as
follows: ''the trust instrument requires that at least 1 trustee of
the trust be an individual citizen of the United States or a
domestic corporation and that no distribution from the trust may be
made without the approval of such a trustee,''.
Subsec. (b)(2)(B)(ii). Pub. L. 101-508, Sec. 11704(a)(15),
substituted ''therefor'' for ''therefore'' in concluding
provisions.
Subsec. (b)(10)(A). Pub. L. 101-508, Sec. 11702(g)(4),
substituted ''section 2011, 2014, 2032'' for ''section 2032''.
Subsec. (b)(14), (15). Pub. L. 101-508, Sec. 11702(g)(2)(B),
added pars. (14) and (15).
Subsec. (d). Pub. L. 101-508, Sec. 11702(g)(3)(A), inserted at
end ''No election may be made under this section on any return if
such return is filed more than one year after the time prescribed
by law (including extensions) for filing such return.''
1989 - Subsec. (a)(1). Pub. L. 101-239, Sec. 7815(d)(7)(A)(i),
amended par. (1) generally. Prior to amendment, par. (1) read as
follows: ''the trust instrument requires that all trustees of the
trust be individual citizens of the United States or domestic
corporations,''.
Subsec. (a)(2) to (4). Pub. L. 101-239, Sec. 7815(d)(7)(A)(ii),
redesignated pars. (3) and (4) as (2) and (3), respectively, and
struck out former par. (2) which read as follows: ''the surviving
spouse of the decedent is entitled to all the income from the
property in such trust, payable annually or at more frequent
intervals,''.
Subsec. (b)(1)(A). Pub. L. 101-239, Sec. 7815(d)(7)(C), struck
out ''other than a distribution of income required under subsection
(a)(2)'' after ''qualified domestic trust''.
Subsec. (b)(2)(B)(ii). Pub. L. 101-239, Sec. 7815(d)(11),
inserted ''(with interest)'' after ''credit or refund''.
Subsec. (b)(2)(C). Pub. L. 101-239, Sec. 7815(d)(12), added
subpar. (C).
Subsec. (b)(3). Pub. L. 101-239, Sec. 7815(d)(7)(B), added par.
(3). Former par. (3) redesignated (4).
Subsec. (b)(4). Pub. L. 101-239, Sec. 7815(d)(7)(D), amended par.
(4) generally. Prior to amendment, par. (4) read as follows: ''If
any person other than an individual citizen of the United States or
a domestic corporation becomes a trustee of a qualified domestic
trust (or such trust ceases to meet the requirements of subsection
(a)(3)), the tax imposed by paragraph (1) shall apply as if the
surviving spouse died on the date on which such person became such
a trustee or the date of such cessation, as the case may be.''
Pub. L. 101-239, Sec. 7815(d)(7)(B), redesignated par. (3) as
(4). Former par. (4) redesignated (5).
Subsec. (b)(5). Pub. L. 101-239, Sec. 7815(d)(15), amended par.
(5) generally. Prior to amendment, par. (5) read as follows: ''The
estate tax imposed by paragraph (1) shall be due and payable on the
15th day of the 4th month following the calendar year in which the
taxable event occurs.''
Pub. L. 101-239, Sec. 7815(d)(7)(B), redesignated par. (4) as
(5). Former par. (5) redesignated (6).
Subsec. (b)(6) to (9). Pub. L. 101-239, Sec. 7815(d)(7)(B),
redesignated pars. (5) to (8) as (6) to (9), respectively.
Subsec. (b)(10) to (13). Pub. L. 101-239, Sec. 7815(d)(9), added
pars. (10) to (13).
Subsec. (c)(2). Pub. L. 101-239, Sec. 7815(d)(10), substituted
''Except as provided in regulations, the term'' for ''The term''.
Subsec. (e). Pub. L. 101-239, Sec. 7815(d)(13), added subsec.
(e).
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to estates of decedents
dying, and generation-skipping transfers, after Dec. 31, 2004, see
section 532(d) of Pub. L. 107-16, set out as a note under section
2011 of this title.
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 1997 AMENDMENT
Section 1312(b) of Pub. L. 105-34 provided that: ''The amendment
made by this section (amending this section) shall apply to estates
of decedents dying after the date of the enactment of this Act
(Aug. 5, 1997).''
Section 1314(b) of Pub. L. 105-34 provided that: ''The amendment
made by this section (amending this section) shall apply to estates
of decedents dying after the date of the enactment of this Act
(Aug. 5, 1997).''
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11702(g)(2), (4) of Pub. L. 101-508
effective as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 11702(j) of Pub. L. 101-508, set out
as a note under section 59 of this title.
Section 11702(g)(3)(B) of Pub. L. 101-508 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
not apply to any election made before the date 6 months after the
date of the enactment of this Act (Nov. 5, 1990).''
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE
Section applicable to estates of decedents dying after Nov. 10,
1988, see section 5033(d)(1) of Pub. L. 100-647, set out as an
Effective Date of 1988 Amendment note under section 2056 of this
title.
TRANSITIONAL RULE
Section 1303 of Pub. L. 105-34 provided that:
''(a) General Rule. - In the case of any trust created under an
instrument executed before the date of the enactment of the Revenue
Reconciliation Act of 1990 (Nov. 5, 1990), such trust shall be
treated as meeting the requirements of paragraph (1) of section
2056A(a) of the Internal Revenue Code of 1986 if the trust
instrument requires that all trustees of the trust be individual
citizens of the United States or domestic corporations.
''(b) Effective Date. - The provisions of subsection (a) shall
take effect as if included in the provisions of section 11702(g) of
the Revenue Reconciliation Act of 1990 (Pub. L. 101-508).''
APPLICATION OF AMENDMENTS BY SECTION 5033 OF PUB. L. 100-647 TO
ESTATES OF, OR GIFTS BY, NONCITIZEN AND NONRESIDENT INDIVIDUALS
For provisions directing that in the case of the estate of, or
gift by, an individual who was not a citizen or resident of the
United States but was a resident of a foreign country with which
the United States has a tax treaty with respect to estate,
inheritance, or gift taxes, this section shall not apply to the
extent such section would be inconsistent with the provisions of
such treaty relating to estate, inheritance, or gift tax marital
deductions, but that in the case of the estate of an individual
dying before the date 3 years after Dec. 19, 1989, or a gift by an
individual before the date 3 years after Dec. 19, 1989, the
requirement of the preceding provision that the individual not be a
citizen or resident of the United States shall not apply, see
section 7815(d)(14) of Pub. L. 101-239, set out as a note under
section 2056 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 2056, 2210 of this title.
