26 U.S.C. § 2035

Adjustments for certain gifts made within 3 years of decedent’s death

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(a) Inclusion of certain property in gross estateIf—(1) the decedent made a transfer (by trust or otherwise) of an interest in any property, or relinquished a power with respect to any property, during the 3-year period ending on the date of the decedent’s death, and(2) the value of such property (or an interest therein) would have been included in the decedent’s gross estate under section 2036, 2037, 2038, or 2042 if such transferred interest or relinquished power had been retained by the decedent on the date of his death,the value of the gross estate shall include the value of any property (or interest therein) which would have been so included.(b) Inclusion of gift tax on gifts made during 3 years before decedent’s death

The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse during the 3-year period ending on the date of the decedent’s death.

(c) Other rules relating to transfers within 3 years of death(1) In generalFor purposes of—(A) section 303(b) (relating to distributions in redemption of stock to pay death taxes),(B) section 2032A (relating to special valuation of certain farms, etc., real property), and(C) subchapter C of chapter 64 (relating to lien for taxes),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, by trust or otherwise, during the 3-year period ending on the date of the decedent’s death.(2) Coordination with section 6166

An estate shall be treated as meeting the 35 percent of adjusted gross estate requirement of section 6166(a)(1) only if the estate meets such requirement both with and without the application of subsection (a).

(3) Marital and small transfers

Paragraph (1) shall not apply to any transfer (other than a transfer with respect to a life insurance policy) made during a calendar year to any donee if the decedent was not required by section 6019 (other than by reason of section 6019(2)) to file any gift tax return for such year with respect to transfers to such donee.

(d) Exception

Subsection (a) and paragraph (1) of subsection (c) shall not apply to any bona fide sale for an adequate and full consideration in money or money’s worth.

(e) Treatment of certain transfers from revocable trusts

For purposes of this section and section 2038, any transfer from any portion of a trust during any period that such portion was treated under section 676 as owned by the decedent by reason of a power in the grantor (determined without regard to section 672(e)) shall be treated as a transfer made directly by the decedent.

(Aug. 16, 1954, ch. 736, 68A Stat. 381; Pub. L. 87–834, § 18(a)(2)(C), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94–455, title XX, § 2001(a)(5), Oct. 4, 1976, 90 Stat. 1848; Pub. L. 95–600, title VII, § 702(f)(1), Nov. 6, 1978, 92 Stat. 2930; Pub. L. 97–34, title IV, §§ 403(b)(3)(B), 424(a), Aug. 13, 1981, 95 Stat. 301, 317; Pub. L. 97–448, title I, § 104(a)(9), (d)(1)(A), (C), (2), Jan. 12, 1983, 96 Stat. 2381, 2383; Pub. L. 105–34, title XIII, § 1310(a), Aug. 5, 1997, 111 Stat. 1043; Pub. L. 106–554, § 1(a)(7) [title III, § 319(14)], Dec. 21, 2000, 114 Stat. 2763, 2763A–646.)Editorial NotesAmendments

2000—Subsec. (c)(2). Pub. L. 106–554, § 1(a)(7) [title III, § 319(14)(A)], substituted “subsection (a)” for “paragraph (1)”.

Subsec. (d). Pub. L. 106–554, § 1(a)(7) [title III, § 319(14)(B)], inserted “and paragraph (1) of subsection (c)” after “Subsection (a)”.

1997—Pub. L. 105–34 amended section catchline and text generally. Prior to amendment, section consisted of subsecs. (a) to (d) relating to adjustments for gifts made within 3 years of decedent’s death.

1983—Subsec. (b)(2). Pub. L. 97–448, § 104(a)(9), substituted “section 6019(2)” for “section 6019(a)(2)”.

Subsec. (d)(2). Pub. L. 97–448, § 104(d)(2), inserted “of this subsection and paragraph (2) of subsection (b)” after “Paragraph (1)”, and struck out “2041,” after “2038,”.

Subsec. (d)(3)(C), (D). Pub. L. 97–448, § 104(d)(1)(C), redesignated subpar. (D) as (C). Former subpar. (C), which referred to section 6166 (relating to extension of time for payment of estate tax where estate consists largely of interest in closely held business), was struck out.

Subsec. (d)(4). Pub. L. 97–448, § 104(d)(1)(A), added par. (4).

1981—Subsec. (b)(2). Pub. L. 97–34, § 403(b)(3)(B), inserted “(other than by reason of section 6019(a)(2))” after “section 6019”.

Subsec. (d). Pub. L. 97–34, § 424(a), added subsec. (d).

1978—Subsec. (b). Pub. L. 95–600 substituted in par. (2) provisions relating to gifts for which donee was not required by section 6019 to file gift tax returns for provisions relating to gifts excludable in computing taxable gifts by reason of section 2503(b) and inserted provisions following par. (2) relating to inapplicability of par. (2) to transfers respecting life insurance policies.

1976—Pub. L. 94–455 substituted provisions covering adjustments for gifts made within 3 years of decedent’s death for provisions under which transfers by the decedent within 3 years of the decedent’s death were deemed to have been made in contemplation of death and included in the value of the gross estate.

1962—Subsec. (a). Pub. L. 87–834 struck out provisions which excepted real property situated outside of the United States.

Statutory Notes and Related SubsidiariesEffective Date of 1997 Amendment

Pub. L. 105–34, title XIII, § 1310(c), Aug. 5, 1997, 111 Stat. 1044, provided that: “The amendments made by this section [amending this section] shall apply to the estates of decedents dying after the date of the enactment of this Act [Aug. 5, 1997].”

Effective Date of 1983 Amendment

Amendment by Pub. L. 97–448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97–34, to which such amendment relates, see section 109 of Pub. L. 97–448, set out as a note under section 1 of this title.

Effective Date of 1981 Amendment

Amendment by section 403(b)(3)(B) of Pub. L. 97–34 applicable to estates of decedents dying after Dec. 31, 1981, see section 403(e) of Pub. L. 97–34, set out as a note under section 2056 of this title.

Pub. L. 97–34, title IV, § 424(b), Aug. 13, 1981, 95 Stat. 317, provided that: “The amendment made by subsection (a) [amending this section] shall apply to the estates of decedents dying after December 31, 1981.”

Effective Date of 1978 Amendment

Pub. L. 95–600, title VII, § 702(f)(2), Nov. 6, 1978, 92 Stat. 2930, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to the estates of decedents dying after December 31, 1976, except that it shall not apply to transfers made before January 1, 1977.”

Effective Date of 1976 Amendment

Amendment by Pub. L. 94–455 applicable to estates of decedents dying after Dec. 31, 1976, but not to transfers made before Jan. 1, 1977, see section 2001(d)(1) of Pub. L. 94–455, set out as a note under section 2001 of this title.

Effective Date of 1962 Amendment

Amendment 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 section 2031 of this title.

Transfers Made by Decedent During 1977; Election Available to Executor On or Before Due Date for Filing Estate Tax Return

Pub. L. 96–222, title I, § 107(a)(2)(F), Apr. 1, 1980, 94 Stat. 223, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:“(i) If the executor elects the benefits of this subparagraph with respect to any estate, section 2035(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to adjustments for gifts made within 3 years of decedent’s death) shall be applied with respect to transfers made by the decedent during 1977 as if paragraph (2) of such section 2035(b) read as follows:

“ ‘(2) to any gift to a donee made during 1977 to the extent of the amount of such gift which was excludable in computing taxable gifts by reason of section 2503(b) (relating to $3,000 annual exclusion for purposes of the gift tax) determined without regard to section 2513(a).’

“(ii) The election under clause (i) with respect to any estate shall be made on or before the later of—“(I) the due date for filing the estate tax return, or“(II) the day which is 120 days after the date of the enactment of this Act [Apr. 1, 1980].”

Notes of Decisions

Cited in 80 cases (1 in the last 5 years), 1960–2023 · leading case: Page v. Comm'r of Revenue, 450 N.E.2d 590 (Mass. 1983).

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Page v. Comm'r of Revenue, 450 N.E.2d 590 (Mass. 1983). · cites it 2× “See 26 U.S.C. § 2035 (1970). 4 This question raises two issues: (a) Does the estate tax statute expressly exclude these securities from the Massachusetts gross estate? (b) If not, is the statute unconstitutional ? 5 That the transfer was a “gift made in contemplation of death”…”

Jewett v. Comm'r, 455 U.S. 305 (1982). · cites it 2× “The former was a federal estate tax case centering on 26 U. S. C. § 2035 (disclaimer within three years of death).”

United States v. Hemme, 476 U.S. 558 (1986). · cites it 2× “See 26 U. S. C. §2035 (1970 ed.). After including in the estate the full $45,000 worth of gifts given on September 28, 1976, the estate then claimed its entire unified credit provided by the new Act for decedents dying in 1978, in the amount of $34,000.”

Est. of Stewart v. Comm'r, 617 F.3d 148 (2d Cir. 2010). · cites it 4× “[7] Indeed, in 1981 when Congress modified the closely related statute 26 U.S.C. § 2035 (a), which had previously provided that most transfers within three years of death had to be included in the gross estate, see 26 U.”

United States v. Generes, 405 U.S. 93 (1972). · cites it 2× “§ 531 , and for includability in the gross estate, for federal estate tax purposes, of a transfer made in contemplation of death under § 2035, 26 U. S. C. § 2035 . Sections 531 and 2035 are Congress' answer to tax avoidance activity.”

Bernard v. Foley, 139 P.3d 1196 (Cal. 2006). “2d 665, 669 [to forestall litigation seeking to ascertain whether a decedent made a transfer in contemplation of death, the Tax Reform Act of 1976 converted the statutory presumption into a mandatory rule that the value of all gifts made by the decedent within three years of…”

Barbara Abrams, as of Lillian Hyman, Deceased v. The United States of Am., 797 F.2d 100 (2d Cir. 1986). · cites it 4× “The district court granted the government’s motion for summary judgment dismissing the complaint on the ground that, within three years of her death, Lillian had paid some $67,000 to a bank on a debt incurred by her husband Charles Hyman, and this amount was therefore includable…”

Est. of Russell E. Hutchinson, Phillip E. Hutchinson & Richard A. Hutchinson, Co-Executors v. Comm'r of Internal Revenue, 765 F.2d 665 (7th Cir. 1985). · cites it 2× “II At issue in this case is 26 U.S.C. § 2035 . When Russell deeded the two tracts of land to Sylvia and Tom, Section 2035 included the value of all transfers made within three years of a transferor’s death in the decedent’s gross estate as transfers made “in contemplation of…”

Renick v. United States, 231 Ct. Cl. 457 (Ct. Cl. 1982). · cites it 3× “26 U.S.C. § 2035 (current version at 26 U.”

Comm'r v. First Sec. Bank of Utah, N. A., 405 U.S. 394 (1972). · cites it 2× “The Code itself provides for the inclusion of transfers theretofore effectively *424 made, but in contemplation of death, 26 U. S. C. § 2035 ; of a variety of inter vivos irrevocable transfers in trust, 26 U.”

Est. of Joan Schnack, Deceased, & William D. Schnack v. Comm'r of Internal Revenue, 848 F.2d 933 (9th Cir. 1988). · cites it 3× “NELSON, Circuit Judge: FACTUAL AND PROCEDURAL BACKGROUND The crux of this controversy involves whether decedent exercised control over the purchase of life insurance sufficient to trigger the application of 26 U.S.C. § 2035 (a). 1 Joan Schnack lived in Sparks, Nevada where she…”

Est. of Joseph Leder, Deceased, Jeanne Leder v. Comm'r of Internal Revenue, 893 F.2d 237 (10th Cir. 1989). · cites it 2× “The Commissioner of Internal Revenue (“Commissioner”) appeals the decision of the United States Tax Court (“Tax Court”) that the proceeds from an insurance policy are not includable in the insured’s gross estate under section 2035(d) of the Internal Revenue Code, 26 U.S.C. §…”

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— 26 U.S.C. § 2035(a) — 1 case

Est. of Joan Schnack, Deceased, & William D. Schnack v. Comm'r of Internal Revenue, 848 F.2d 933 (9th Cir. 1988). “NELSON, Circuit Judge: FACTUAL AND PROCEDURAL BACKGROUND The crux of this controversy involves whether decedent exercised control over the purchase of life insurance sufficient to trigger the application of 26 U.S.C. § 2035 (a). 1 Joan Schnack lived in Sparks, Nevada where she…”

— 26 U.S.C. § 2035(b) — 1 case

Bel v. United States, 452 F.2d 683 (5th Cir. 1971).

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