The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death-
For purposes of subsection (a)(1), the retention of the right to vote (directly or indirectly) shares of stock of a controlled corporation shall be considered to be a retention of the enjoyment of transferred property.
For purposes of paragraph (1), a corporation shall be treated as a controlled corporation if, at any time after the transfer of the property and during the 3-year period ending on the date of the decedent's death, the decedent owned (with the application of section 318), or had the right (either alone or in conjunction with any person) to vote, stock possessing at least 20 percent of the total combined voting power of all classes of stock.
For purposes of applying section 2035 with respect to paragraph (1), the relinquishment or cessation of voting rights shall be treated as a transfer of property made by the decedent.
This section shall not apply to a transfer made before March 4, 1931; nor to a transfer made after March 3, 1931, and before June 7, 1932, unless the property transferred would have been includible in the decedent's gross estate by reason of the amendatory language of the joint resolution of March 3, 1931 (46 Stat. 1516).
26 U.S.C. § 2036
Aug. 16, 1954, ch. 736, 68A Stat. 382; Pub. L. 87-834Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455Oct. 4, 1976, 90 Stat. 1893; Pub. L. 95-600Nov. 6, 1978, 92 Stat. 2931; Pub. L. 100-203, title X, §10402(a), Dec. 22, 1987, 101 Stat. 1330-431; Pub. L. 100-647, title III, §3031(a)(1), (b)-(e), (g), Nov. 10, 1988, 102 Stat. 3634-3638; Pub. L. 101-5081990.
AMENDMENTS 1990-Subsecs. (c), (d). Pub. L. 101-508 redesignated subsec. (d) as (c) and struck out former subsec. (c) which enunciated a rule that retention of retained interest would be considered to be a retention of enjoyment of transferred property if a person held a substantial interest in an enterprise, and such person in effect transferred after Dec. 17, 1987, property having a disproportionately large share of the potential appreciation in such person's interest in the enterprise while retaining an interest in the income of, or rights in, the enterprise.1988-Subsec. (c)(1)(B). Pub. L. 100-647substituted "an interest" for "a disproportionately large share" after "whole retaining".Subsec. (c)(2). Pub. L. 100-647substituted "consideration furnished by" for "sales to" in heading, and amended text generally. Prior to amendment, text read as follows: "The exception contained in subsection (a) for a bona fide sale shall not apply to a transfer described in paragraph (1) if such transfer is to a member of the transferor's family."Subsec. (c)(3)(C). Pub. L. 100-647substituted "Except as provided in regulations, an" for "An".Subsec. (c)(4). Pub. L. 100-647amended par. (4) generally, substituting provisions relating to treatment of certain transfers for provisions relating to coordination with section 2035.Subsec. (c)(5). Pub. L. 100-647amended par. (5) generally, substituting provisions relating to the making of appropriate adjustments in amounts included in gross estate for provisions relating to coordination with section 2043.Subsec. (c)(6). Pub. L. 100-647added par. (6).Subsec. (c)(7), (8). Pub. L. 100-647, added pars. (7) and (8).1987-Subsecs. (c), (d). Pub. L. 100-203 added subsec. (c) and redesignated former subsec. (c) as (d).1978-Subsec. (a). Pub. L. 95-600struck out provision following par. (2) relating to the retention of voting rights in retained stock.Subsecs. (b), (c). Pub. L. 95-600added subsec. (b) and redesignated former subsec. (b) as (c).1976-Subsec. (a). Pub. L. 94-455 provided that, for purposes of par. (1), the retention of voting rights in retained stock be considered to be a retention of the enjoyment of that stock.1962-Subsec. (a). Pub. L. 87-834 struck out provisions which excepted real property situated outside of the United States.
EFFECTIVE DATE OF 1990 AMENDMENTPub. L. 101-5081990, provided that: "The amendments made by this section [amending this section and sectionsand of this title] shall apply in the case of property transferred after December 17, 1987."
EFFECTIVE DATE OF 1988 AMENDMENTPub. L. 100-647, title III, §3031(h), Nov. 10, 1988, 102 Stat. 3639, provided that:"(1) IN GENERAL.-Except as provided in this subsection, any amendment made by this section [enacting section transaction entered into during the period beginning after December 17, 1987, and ending before January 1, 1990, such section shall not apply to such interest if-"(A) during such period, such actions are taken as are necessary to have such section 2036(c)(1) not apply to such transaction (and any such interest), or"(B) the original transferor and his spouse on January 1, 1990 (or, if earlier, the date of the original transferor's death), does not hold any interest in the enterprise involved."(5) CLARIFICATION OF EFFECTIVE DATE.-For purposes of section 10402(b) of the Revenue Act of 1987 [Pub. L. 100-203, set out as an Effective Date of 1987 Amendment note below], with respect to property transferred on or before December 17, 1987-"(A) any failure to exercise a right of conversion,"(B) any failure to pay dividends, and"(c) [sic] failures to exercise other rights specified in regulations,shall not be treated as a subsequent transfer."of this title and amending this section and section of this title] shall take effect as if included in the provisions of the Revenue Act of 1987 [Pub. L. 100-203, title X] to which such amendment relates."(2) SUBSECTION (a).-The amendments made by subsection (a) [amending this section and section of this title] shall apply in cases where the transfer referred to in section 2036(c)(1)(B) of the 1986 Code is on or after June 21, 1988."(3) SUBSECTION (f).-If an amount is included in the gross estate of a decedent under section 2036 of the 1986 Code other than solely by reason of section 2036(c) of the 1986 Code, the amendments made by subsection (f) [enacting section of this title] shall apply to such amount only with respect to property transferred after the date of the enactment of this Act [Nov. 10, 1988]."(4) CORRECTION PERIOD.-If section 2036(c)(1) of the 1986 Code would (but for this paragraph) apply to any interest arising from a
EFFECTIVE DATE OF 1987 AMENDMENTPub. L. 100-203, title X, §10402(b), Dec. 22, 1987, 101 Stat. 1330-432, provided that: "The amendment made by subsection (a) [amending this section] shall apply with respect to estates of decedents dying after December 31, 1987, but only in the case of property transferred after December 17, 1987." [For clarification of this note, see section 3031(h)(5) of Pub. L. 100-647, set out as an Effective Date of 1988 Amendment note above.]
EFFECTIVE DATE OF 1978 AMENDMENTPub. L. 95-600Nov. 6, 1978, 92 Stat. 2931, provided that: "The amendments made by this subsection [amending this section] shall apply to transfers made after June 22, 1976."
EFFECTIVE DATE OF 1976 AMENDMENTPub. L. 94-455Oct. 4, 1976, 90 Stat. 1896, provided that: "The amendment made by subsection (a) [amending this section] shall apply to transfers made after June 22, 1976."
EFFECTIVE DATE OF 1962 AMENDMENTAmendment by Pub. L. 87-834 applicable to estates of decedents dying after Oct. 16, 1962, except as otherwise provided, see section 18(b) of Pub. L. 87-834, set out as a note under sectionof this title.
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- The term "transaction" includes a series of transactions.