26 U.S.C. § 2040

Joint interests

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(a) General rule

The value of the gross estate shall include the value of all property to the extent of the interest therein held as joint tenants with right of survivorship by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money’s worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than an adequate and full consideration in money or money’s worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy by the entirety by the decedent and spouse, then to the extent of one-half of the value thereof, or, where so acquired by the decedent and any other person as joint tenants with right of survivorship and their interests are not otherwise specified or fixed by law, then to the extent of the value of a fractional part to be determined by dividing the value of the property by the number of joint tenants with right of survivorship.

(b) Certain joint interests of husband and wife(1) Interests of spouse excluded from gross estate

Notwithstanding subsection (a), in the case of any qualified joint interest, the value included in the gross estate with respect to such interest by reason of this section is one-half of the value of such qualified joint interest.

(2) Qualified joint interest definedFor purposes of paragraph (1), the term “qualified joint interest” means any interest in property held by the decedent and the decedent’s spouse as—(A) tenants by the entirety, or(B) joint tenants with right of survivorship, but only if the decedent and the spouse of the decedent are the only joint tenants.(Aug. 16, 1954, ch. 736, 68A Stat. 385; Pub. L. 87–834, § 18(a)(2)(G), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94–455, title XX, § 2002(c)(1), (3), Oct. 4, 1976, 90 Stat. 1855, 1856; Pub. L. 95–600, title V, § 511(a), title VII, § 702(k)(2), Nov. 6, 1978, 92 Stat. 2881, 2932; Pub. L. 96–222, title I, § 105(a)(3), Apr. 1, 1980, 94 Stat. 218; Pub. L. 97–34, title IV, § 403(c)(1)–(3)(A), Aug. 13, 1981, 95 Stat. 301, 302.)Editorial NotesAmendments

1981—Subsec. (a). Pub. L. 97–34, § 403(c)(2), substituted “joint tenants with right of survivorship” for “joint tenants” in three places.

Subsec. (b)(2). Pub. L. 97–34, § 403(c)(1), in redefining “qualified joint interest” substituted provision defining term as meaning any interest in property held by the decedent and the decedent’s spouse as tenants by the entirety, or joint tenants with right of survivorship, but only if the decedent and the spouse of the decedent are the only joint tenants for provision defining the term as meaning any interest in property held by the decedent and the decedent’s spouse as joint tenants or as tenants by the entirety, but only if such joint interest was created by the decedent, the decedent’s spouse, or both, in the case of personal property, the creation of such joint interest constituted in whole or in part a gift for purposes of chapter 12, or in the case of real property, an election under section 2515 applies with respect to the creation of such joint interest, and in the case of a joint tenancy, only the decedent and the decedent’s spouse are joint tenants.

Subsecs. (c) to (e). Pub. L. 97–34, § 403(c)(3)(A), repealed subsec. (c) respecting value where spouse of decedent materially participated in farm or other business, subsec. (d) relating to joint interests of husband and wife created before 1977, and subsec. (e) covering treatment of certain post-1976 terminations.

1980—Subsec. (c)(1). Pub. L. 96–222, § 105(a)(3)(B), substituted “subsection (a)” for “subsections (a)”.

Subsec. (c)(2)(C). Pub. L. 96–222, § 105(a)(3)(A), added subpar. (C).

1978—Subsec. (c). Pub. L. 95–600, § 511(a), added subsec. (c).

Subsecs. (d), (e). Pub. L. 95–600, § 702(k)(2), added subsecs. (d) and (e).

1976—Pub. L. 94–455 designated existing provisions as subsec. (a), added heading for subsec. (a), and added subsec. (b).

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

Statutory Notes and Related SubsidiariesEffective Date of 1981 Amendment

Amendment by 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.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96–222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title.

Effective Date of 1978 Amendment

Pub. L. 95–600, title V, § 511(b), Nov. 6, 1978, 92 Stat. 2882, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to estates of decedents dying after December 31, 1978.”

Effective Date of 1976 Amendment

Pub. L. 94–455, title XX, § 2002(d)(3), Oct. 4, 1976, 90 Stat. 1856, provided that: “The amendment made by subsection (c) [amending this section and section 2515 of this title] shall apply to joint interests created after December 31, 1976.”

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.

Consideration Given Before July 14, 1988 by Decedent to Noncitizen Spouse Treated as Originally Belonging to Spouse

Pub. L. 101–239, title VII, § 7815(d)(16), Dec. 19, 1989, 103 Stat. 2419, as amended by Pub. L. 101–508, title XI, § 11701(l)(3), Nov. 5, 1990, 104 Stat. 1388–513, provided that: “For purposes of applying section 2040(a) of the Internal Revenue Code of 1986 with respect to any joint interest to which section 2040(b) of such Code does not apply solely by reason of section 2056(d)(1)(B) of such Code, any consideration furnished before July 14, 1988, by the decedent for such interest to the extent treated as a gift to the spouse of the decedent for purposes of chapter 12 of such Code (or would have been so treated if the donor were a citizen of the United States) shall be treated as consideration originally belonging to such spouse and never acquired by such spouse from the decedent.”

Notes of Decisions

Cited in 37 cases, 1960–2019 · leading case: Joy B. Patten, Adm'r of the Est. of Marjory L. Blaney, Deceased v. United States, 116 F.3d 1029 (4th Cir. 1997).

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Joy B. Patten, Adm'r of the Est. of Marjory L. Blaney, Deceased v. United States, 116 F.3d 1029 (4th Cir. 1997). · cites it 9× “The district court concluded that the effective date of 26 U.S.C. § 2040 (b)(2) (1994), did not expressly or impliedly repeal the effective date of 26 U.”

Baillie v. Raoul, 2019 IL App (4th) 180655 (Ill. App. Ct. 2019). · cites it 10× “The answer, according to the State, is in subsection (b)(1) of section 2040 of the Internal Revenue Code ( 26 U.S.C. § 2040 (b)(1) (2012)): Each of the joint tenancy parcels, the State argues, was a qualified joint interest within the meaning of that subsection, and subsection…”

Sorenson v. Fio Rito, 413 N.E.2d 47 (Ill. App. Ct. 1980). · cites it 2× “Under 26 U.S.C. § 2040 (1978 Supp.), the full value of joint tenancy property is subject to the Federal estate tax except to the extent that a surviving joint tenant can show that a portion of the property originally belonged to the survivor.”

M. Lee Gallenstein v. United States, 975 F.2d 286 (6th Cir. 1992). · cites it 3× “”) [ 26 U.S.C. § 2040 ], as amended, which governs the value of jointly-owned property to be included in a decedent’s estate for federal estate tax purposes, requires including only 50% of the value of certain farm property in the taxpayer’s deceased husband’s estate; and…”

Comm'r v. First Sec. Bank of Utah, N. A., 405 U.S. 394 (1972). · cites it 2× “§§ 2036-2038 ; and of joint interests, 26 U. S. C. § 2040 , in all of which situations the ownership interest at death was nonexistent or less than full.”

Est. of Stewart v. Comm'r, 617 F.3d 148 (2d Cir. 2010). · cites it 2× “Bittker & Lawrence Lokken, Federal Taxation of Income, Estates and Gifts ¶ 126.41. [6] As the Joint Committee on Taxation explained the law applicable in 2000: "The gift tax and the estate tax are unified so that a single graduated rate schedule applies to cumulative taxable…”

Amanda York Beaty & Nancie York Gunter v. United States, 937 F.2d 288 (6th Cir. 1991). “§ 2039 (annuities); 26 U.S.C. § 2040 (joint interests); 26 U.”

Union Planters Nat'l Bank, of the Est. of Forrest C. Ladd v. United States, 361 F.2d 662 (6th Cir. 1966). · cites it 2× “26 U.S.C. § 2040 . No such specific language is to be found in § 2036.”

Est. of Lyla C. Curry, Robert L. Curry v. United States, 409 F.2d 671 (6th Cir. 1969). · cites it 2× “On this appeal the United States contends that since the bonds were registered in the names of both the decedent and her nephew at the time of her death and since the decedent provided all the consideration for the bonds, they were taxable to the estate of the decedent under 26…”

DeSantis v. Prothero, 916 A.2d 671 (Pa. Super. Ct. 2007). “880 (quoting 26 U.S.C. § 2040 .) While there appears to us an incongruity between Section 2040, and the inducement of the bonds in "avoiding complicated probate proceedings,” as recognized Free, 369 U.”

Pearl M. Kennedy v. Comm'r of Internal Revenue, 804 F.2d 1332 (7th Cir. 1986). “And joint tenancies cannot readily be used to skip a generation of taxes, because 26 U.S.C. § 2040 (a) pulls the value of the property into the estate of a deceased joint tenant, just as a general power of appointment *1336 pulls the value of the trust into the estate of the…”

Est. of William L. Reno, Jr. Barbara G. Reno v. Comm'r of Internal Revenue, 916 F.2d 955 (4th Cir. 1991). · cites it 2× “26 U.S.C. § 2040 . Congress created the marital deduction in order to equalize the effect of estate taxes in common law and community property jurisdictions.”

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— 26 U.S.C. § 2040(a) — 1 case

Baillie v. Raoul, 2019 IL App (4th) 180655 (Ill. App. Ct. 2019). “The answer, according to the State, is in subsection (b)(1) of section 2040 of the Internal Revenue Code ( 26 U.S.C. § 2040 (b)(1) (2012)): Each of the joint tenancy parcels, the State argues, was a qualified joint interest within the meaning of that subsection, and subsection…”

— 26 U.S.C. § 2040(b)(1) — 1 case

Patten v. United States (4th Cir. 1997).

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