[Federal Register Volume 61, Number 114 (Wednesday, June 12, 1996)]
[Proposed Rules]
[Pages 29714-29715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13858]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 26
[PS-22-96]
RIN 1545-AU26
Generation-Skipping Transfer Tax
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations relating to the
final generation-skipping transfer (GST) tax regulations under chapter
13 of the Internal Revenue Code (Code). This document proposes a change
to the final regulations and is necessary to provide guidance to
taxpayers so that they may comply with chapter 13 of the Code.
DATES: Written comments and requests for a public hearing must be
received by September 10, 1996.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (PS-22-96), room 5228,
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington,
DC 20044. In the alternative, submissions may be hand delivered between
the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (PS-22-96), Courier's
Desk, Internal Revenue Service, 1111 Constitution NW., Washington, DC
20224.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulation,
James F. Hogan, (202) 622-3090 (not a toll-free number); concerning
submissions, Christina Vasquez, (202) 622-7180, (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Background
On December 24, 1992, the IRS published a notice of proposed
rulemaking in the Federal Register (57 FR 61356) containing proposed
regulations under sections 2611, 2612, 2613, 2632, 2641, 2642, 2652,
2653, 2654, and 2663. On December 27, 1995, the IRS published final
regulations in the Federal Register (60 FR 66898) under sections 2611,
2612, 2613, 2632, 2641, 2642, 2652, 2653, 2654, and 2663. This proposed
regulation will delete Sec. 26.2652-1(a)(4) and two related examples.
Explanation of Provision
Section 2652(a)(1) provides generally, that the term transferor
means--(A) in the case of any property subject to the tax imposed by
chapter 11, the decedent, and (B) in the case of any property subject
to the tax imposed by chapter 12, the donor. An individual is treated
as transferring any property with respect to which the individual is
the transferor. Under Sec. 26.2652-1(a)(2), a transfer is subject to
Federal gift tax if a gift tax is imposed under section 2501(a) and is
subject to Federal estate tax if the value of the property is
includable in the decedent's gross estate determined under section 2031
or section 2103. Under Sec. 26.2652-1(a)(4), the exercise of a power of
appointment that is not a general power of appointment is also treated
as a transfer subject to Federal estate or gift tax by the holder of
the power if the power is exercised in a manner that may postpone or
suspend the vesting, absolute ownership, or power of alienation of an
interest in property for a period, measured from the date of the
creation of the trust, extending beyond any specified life in being at
the date of creation of the trust plus a period of 21 years plus, if
necessary, a reasonable period of gestation.
The purpose of the rule in Sec. 26.2652-1(a)(4) was to apply the
GST tax when
[[Page 29715]]
it may not otherwise have applied. It was never intended to (nor could
it) prevent the application of the tax pursuant to the statutory
provisions that apply based on the original taxable transfer. To
eliminate any uncertainty concerning the proper application of the GST
tax, the regulations under section 2652(a) will be clarified by
eliminating Sec. 26.2652-1(a)(4) and Example 9 and Example 10 in
Sec. 26.2652-1(a)(6) from the final regulations.
Proposed Effective Date
These amendments apply to transfers to trusts on or after June 12,
1996.
Special Analysis
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866. Therefore,
a regulatory assessment is not required. It has also been determined
that section 553(b) of the Administrative Procedure Act (5 U.S.C.
chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do
not apply to these regulations, and therefore, a Regulatory Flexibility
Analysis is not required. Pursuant to section 7805(f) of the Internal
Revenue Code, the notice of proposed rulemaking preceding these
regulations was submitted to the Small Business Administration for
comment on its impact on small business.
Comments and Requests for a Public Hearing
Before this proposed regulation is adopted as a final regulation,
consideration will be given to any written comments (a signed original
and eight (8) copies) that are submitted timely to the IRS. All
comments will be available for public inspection and copying. A public
hearing may be scheduled if requested in writing by a person that
timely submits written comments. If a public hearing is scheduled,
notice of the date, time, and place for the hearing will be published
in the Federal Register.
Drafting Information
The principal author of this proposed regulation is James F. Hogan,
Office of the Chief Counsel, IRS. Other personnel from the IRS and
Treasury Department participated in its development.
List of Subjects in 26 CFR Part 26
Estate taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 26 is proposed to be amended as follows:
PART 26--GENERATION-SKIPPING TRANSFER TAX REGULATIONS UNDER THE TAX
REFORM ACT OF 1986
Paragraph 1. The authority citation for part 26 continues to read,
in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 26.2652-1 is amended as follows:
Sec. 26.2652-1 [Amended]
1. Paragraph (a)(4) is removed and paragraphs (a)(5) and (a)(6) are
redesignated as paragraphs (a)(4) and (a)(5), respectively.
2. In newly designated paragraph (a)(5), Examples 9 and 10 are
removed and Example 11 is redesignated as Example 9.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 96-13858 Filed 6-11-96; 8:45 am]
BILLING CODE 4830-01-U