ent's property if the corporation or ther person, having no information to he contrary, first receives from the excutor or other responsible person, who may be reasonably regarded as in possession of the pertinent facts, a statehent that the total value, as of the date f the decedent's death, of that part of is gross estate situated in the United States is not in excess of $2,000. Also, a ransfer certificate is not required for onds owned by a nonresident decedent ho was not a citizen of the United States at the time of his death if it is hown that the bonds were not physcally situated in the United States at the ime of his death.

(c) A transfer certificate will be issued y the district director when he is satised that the tax imposed upon the estate, any, has been fully discharged or proided for. The tax will be considered ully discharged for purposes of the isance of a transfer certificate only when investigation has been completed nd payment of the tax, including any eficiency finally determined, has been ade. If the tax liability has not been ally discharged, transfer certificates may be issued permitting the transfer of articular items of property without ability upon the filing with the district irector of such security as he may reuire. No transfer certificate is required an estate of a resident decedent. Furher, in the case of an estate of a onresident decedent (regardless of citenship) a transfer certificate is not equired with respect to property which being administered by an executor or dministrator appointed, qualified, and cting within the United States. For adtional regulations under section 6325, e § 301.6325-1 of this chapter (Regutions on Procedure and Administraon).

SEC. 6601. Interest on underpayment, nonyment, or extensions of time for payment, tax-(a) General rule. If any amount of x imposed by this title (whether required be shown on a return, or to be paid by amp or by some other method) is not paid or before the last date prescribed for payent, interest on such amount at the rate of percent per annum shall be paid for the peod from such last date to the date paid. (b) Extensions of time for payment of tate tax. If the time for payment of an

amount of tax imposed by chapter 11 is extended as provided in section 6161(a) (2) or 6166, or if the time for payment of an amount of such tax is postponed or extended as provided by section 6163, interest shall be paid at the rate of 4 percent, in lieu of 6 percent as provided in subsection (a).

[Sec. 6601 as amended by sec. 66(c), Technical Amendments Act 1958 (72 Stat. 1658); sec. 206(e), Small Business Tax Revision Act 1958 (72 Stat. 1685)]

[T.D. 6296, 23 F.R. 4529, June 24, 1958, as amended by T.D. 6522, 25 F.R. 13891, Dec. 29, 1960]

§ 20.6601-1 Interest on underpayment, nonpayment, or extensions of time for payment, of tax.

For regulations concerning interest on underpayments, etc., see § 301.6601-1 of this chapter (Regulations on Procedure and Administration).

§ 20.6905 Statutory provisions; discharge of executor from personal liability for decedent's income and gift

taxes.

(a) Section 6905 as added by section 101 (e) of the Excise, Estate, and Gift Tax Adjustment Act of 1970:

SEC. 6905. Discharge of executor from personal liability for decedent's income and gift taxes-(a) Discharge of liability. In the case of liability of a decedent for taxes imposed by subtitle A or by chapter 12, if the executor makes written application (filed after the return with respect to such taxes is made and filed in such manner and such form as may be prescribed by regulations of the Secretary or his delegate) for release from personal liability for such taxes, the Secretary or his delegate may notify the executor of the amount of such taxes. The executor, upon payment of the amount of which he is notified, or 1 year after receipt of the application if no notification is made by the Secretary or his delegate before such date, shall be discharged from personal liability for any deficiency in such tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.

(b) Definition of executor. For purposes of this section, the term "executor" means the executor or administrator of the decedent appointed, qualified, and acting within the United States.

(c) Cross reference. For discharge of executor from personal liability for taxes imposed under chapter 11, see section 2204.

[Sec. 6905 as added by sec. 101(e), Excise, Estate, and Gift Tax Adjustment Act 1970 (84 Stat. 1837)]

(b) Section 101 (f) of the Excise, Estate, and Gift Tax Adjustment Act of 1970:

(f) Reduction of Period for Discharge of Executor from Personal Liability.-Effective

with respect to the estates of decedents dying after December 31, 1973, sections 2204 and 6905 are each amended by striking out "1 year" and inserting in lieu thereof "9 months".

[Sec. 101 (f), Excise, Estate, and Gift Tax Adjustment Act 1970 (84 Stat. 1838)] [T.D. 7238, 37 F.R. 28724, Dec. 29, 1972]

§ 20.6905-1

Discharge of executor from personal liability for decedent's income and gift taxes.

For regulations concerning the discharge of an executor from personal liability for a decedent's income and gift taxes, see § 301.6905-1 of this chapter (Regulations on Procedure and Administration).

[T.D. 7238, 37 F.R. 28725, Dec. 29, 1972]

§ 20.7101 Statutory provisions; form of bonds.

SEC. 7101. Form of bonds. Whenever, pursuant to the provisions of this title (other than sections 7485 and 6803(a)(1)), or rules or regulations prescribed under authority of this title, a person is required to furnish a bond or security

(1) General rule. Such bond or security shall be in such form and with such surety or sureties as may be prescribed by regulations issued by the Secretary or his delegate.

(2) United States bonds and notes in lieu of surety bonds. The person required to furnish such bond or security may, in lieu thereof, deposit bonds or notes of the United States as provided in 6 U.S.C. 15.

§ 20.7101-1 Form of bonds.

See paragraph (b) of § 20.6165-1 for provisions relating to the bond required in any case in which the payment of the tax attributable to a reversionary or remainder interest has been postponed under the provisions of § 20.6163-1. For further provisions relating to bonds, see § 20.6165-1 of these regulations and the regulations under section 7101 contained in Part 301 of this chapter (Regulations on Procedure and Administration). [T.D. 6600, 27 F.R. 4987, May 29, 1962] § 20.7404 Statutory provisions; authority to bring civil action for estate

taxes.

SEC. 7404. Authority to bring civil action for estate taxes. If the estate tax imposed by chapter 11 is not paid on or before the due date thereof, the Secretary or his delegate shall proceed to collect the tax under the provisions of general law; or appropriate proceedings in the name of the United States may be commenced in any court of the United States having jurisdiction to subject

the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. This section insofar as it applies to the collection of a deficiency shall be subject to the provisions of sections 6213 and 6601.

PART 25-GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954 GIFT TAX

Sec.

25.0-1 Introduction.

DETERMINATION OF TAX LIABILITY 25.2501 Statutory provisions; imposition of tax.

25.2501-1 Imposition of tax.

25.2502 Statutory provisions; rate of tax. 25.2502-1 Rate of tax

25.2502-2 Donor primarily liable for tax. 25.2503 Statutory provisions; taxable gifts. 25.2503-1 General definition of "taxable

gifts" and of "total amount of gifts." 25.2503-2 Exclusions from gifts. 25.3503-3 Future interests in property. 25.2503-4 Transfer for the benefit of a minor.

25.2504 Statutory provisions; taxable gifts for preceding years and quarters. 25.2504-1 Taxable gifts for preceding years. 25.2504-2 Valuation of certain gifts for preceding calendar years and quarters. TRANSFERS

25.2511 Statutory provisions; transfers in

general.

25.2511-1 Transfers in general.

25.2511-2 Cessation of donor's dominion and control.

25.2511-3 Transfers by nonresidents not citizens.

25.2512 Statutory provisions; valuation of gifts.

25.2512-1 Valuation of property; in general. 25.2512-2 Stocks and bonds. 25.2512-3

nesses.

Valuation of interests in busi

Sec. 25.2512-10 Valuation of life estates, terms

for years, remainders and reversions in certain depreciable property. 25.2513 Statutory provisions; gift by husband or wife to third party; considered as made one-half by each.

25.2513-1 Gifts by husband or wife to third party considered as made one-half by each.

25.2513-2 Manner and time of signifying consent.

25.2513-3 Revocation of consent.

25.2513-4 Joint and several liability for tax. 25.2514 Statutory provisions; powers of appointment.

25.2514-1 Transfers under power of appointment.

25.2514-2 Powers of appointment created on or before October 21, 1942. 25.2514-3 Powers of appointment created after October 21, 1942.

25.2515 Statutory provisions; tenancies by the entirety.

25.2515-1 Tenancies by the entirety; in general.

25.2515-2 Tenancies by the entirety; transfers treated as gifts; manner of election and valuation.

25.2515-3 Termination of tenancy by the entirety; cases in which entire value of gift is determined under section 2515(b). 25.2515-4 Termination of tenancy by entirety, cases in which none, or a portion only, of value of gift is determined under section 2515(b).

25.2516 Statutory provisions; certain property settlements.

25.2516-1 Certain property settlements. 25.2516-2 Transfers in settlement of sup

port obligations.

25.2517 Statutory provisions; certain annuities under qualified plans.

25.2517-1 Employees' annuities.

DEDUCTIONS

25.2521 Statutory provisions; specific exemption.

25.2521-1 Specific exemption.

25.2522 (a) Statutory provisions; charitable

and similar gifts; citizens or residents. 25.2522(a)-1 Charitable and similar gifts;

citizens or residents.

25.2522(a)-2 Transfers not exclusively for charitable, etc., purposes.

25.2522(b) Statutory provisions; charitable and similar gifts; nonresidents. 25.2522 (b)-1 Charitable and similar gifts; nonresidents not citizens.

25.2522 (c)

Statutory provisions; charitable and similar gifts; disallowance of deductions in certain cases.

25.2522 (c)-1 Disallowance of charitable, etc., deductions because of prohibited

transactions.

25.2522(d) Statutory provisions; charitable and similar gifts; other cross references.

25.2524-1 Extent of deductions.

PROCEDURE AND ADMINISTRATION

25.6001 Statutory provisions; notice or regulations requiring records, statements and special returns.

25.6001-1 Records required to be kept. 25.6011 Statutory provisions; general re

quirement of return, statement, or list. 25.6011-1 General requirement of return, statement, or list.

25.6019 Statutory provisions; gift tax returns.

25.6019-1 Persons required to file returns. 25.6019-2 Returns required in case of consent under section 2513. 25.6019-3 Contents of return.

25.6019-4 Description of property listed on return.

25.6061 Statutory provisions; signing of returns and other documents.

25.6061-1 Signing of returns and other

documents.

25.6065 Statutory provisions; verification of

returns.

25.6065-1 Verification of returns

25.6075 Statutory provisions; time for filling gift tax returns.

25.6075-1 Returns; time for fling gift tax

returns.

25.6081 Statutory provisions; extension of time for filing returns.

25.6081-1 Extension of time for filing returns.

25.6091 Statutory provisions; place for filing returns or other documents.

25.6091-1 Place for filing returns and other documents.

25.6091-2 Exceptional cases.

25.8151 Statutory provisions; time and place for paying tax shown on returns.

25.6324 Statutory provisions; special liens for estate and gift taxes. 25.6324-1 Special lien for gift tax. 25.6601 Statutory provisions; interest on underpayment, nonpayment, or extensions of time for payment, of tax. 25.6601-1 Interest on underpayment, nonpayment, or extensions of time for payment, of tax.

25.6905 Statutory provisions; discharge of executor from personal liability for decedent's income and gift taxes. 25.6905-1 Discharge of executor from personal liability for decedent's income and gift taxes.

25.7101 Statutory provisions; form of bonds. 25.7101-1 Form of bonds.

AUTHORITY: The provisions of this Part 25 issued under sec. 7805, 68A Stat. 917; 26 U.S.C. 7805.

SOURCE: The provisions of this Part 25 contained in Treasury Decision 6334, 23 F.R. 8904. Nov. 15, 1958; 25 F.R. 14021, Dec. 31, 1960, unless otherwise noted.

(a) In general. (1) The regulations in this part are designated "Gift Tax Regulations." These regulations pertain to (i) the gift tax imposed by chapter 12 of subtitle B of the Internal Revenue Code on the transfer of property by gift by individuals in the calendar year 1955, in subsequent calendar years beginning before the calendar year 1971 and in calendar quarters beginning with the first calendar quarter of calendar year 1971, and (ii) certain related administrative provisions of subtitle F of the Code. It should be noted that the application of some of the provisions of these regulations may be affected by the provisions

of an applicable gift tax convention wit a foreign country. Unless otherwise indi cated, references in these regulations the "Internal Revenue Code" or th "Code" are references to the Interna Revenue Code of 1954, as amended, an references to a section or other provisio of law are references to a section or othe provision of the Internal Revenue Cod of 1954, as amended. The Gift Tax Reg ulations are applicable to the transfer o property by gift by individuals in calen dar years 1955 through 1970 and in cal endar quarters beginning with the firs calendar quarter of calendar year 1971 and supersede the regulations contained in Part 86, Subchapter B, Chapter 1, Title 26, Code of Federal Regulations (1939) (Regulations 108, Gift Tax (8 FR 10858)), as prescribed and made appli cable to the Internal Revenue Code o 1954 by Treasury Decision 6091, signed August 16, 1954 (19 F.R. 5167, Aug. 17 1954). The regulations in this part d not reflect the amendments made by the Foreign Investors Tax Act of 196 (80 Stat. 1539) except as provided in § 25.2501.

(2) Section 2501(b) makes the provi sions of chapter 12 of the Code apply ir the case of gifts made after September 2 1958, by certain citizens of the United States who were residents of a possession thereof at the time the gifts were made Section 2501(c) makes the provisions of chapter 12 apply in the case of gifts made after September 14, 1960, by cer tain other citizens of the United States who were residents of a possession thereof at the time the gifts were made See paragraphs (c) and (d) of § 25.25011. Except as otherwise provided in paragraphs (c) and (d) of § 25.2501-1, the provisions of these regulations do not apply to the making of gifts by such citizens.

(b) Nature of tax. The gift tax is not a property tax. It is a tax imposed upon the transfer of property by individuals. It is not applicable to transfers by corporations or persons other than individuals. However, see paragraph (h)(1) of § 25.2511-1 with respect to the extent to which a transfer by or to a corporation is considered a transfer by or to its shareholders.

(c) Scope of regulations—(1) Determination of tax liability. Subchapter A of chapter 12 of the Code pertains to the determination of tax liability. The

egulations pursuant to subchapter A re set forth in §§ 25.2501-1 through 5.2504-2.

(2) Transfer. Subchapter B of chaper 12 of the Code pertains to the transers which constitute the making of gifts. The regulations pursuant to subchapter I are set forth in §§ 25.2511-1 through 5.2516-2.

(3) Deductions. Subchapter C of hapter 12 of the Code pertains to the eductions which are allowed in deteraining the amount of taxable gifts. The egulations pursuant to subchapter C are et forth in §§ 25.2521-1 through 5.2524-1.

| (4) Procedure and administration rovisions. Subtitle F of the Internal evenue Code contains some sections hich are applicable to the gift tax. The egulations pursuant to those sections re set forth in §§ 25.6001-1 through 5.7101-1. Such regulations do not purort to be all the regulations on proedure and administration which are ertinent to gift tax matters. For the emainder of the regulations on proedure and administration which are ertinent to gift tax matters, see Part 01 of this chapter (Regulations on Proedure and Administration).

(d) Arrangement and numbering. Each section of the Gift Tax Regulations except this section) is preceded by the ection or subsection of the Internal Revenue Code which it interprets. The ections of the regulations can readily e distinguished from sections of the Code since

(1) The sections of the regulations are rinted in larger type;

(2) The sections of the regulations are receded by a section symbol and the art number, arabic number 25 followed y a decimal point (§ 25.); and

(3) The sections of the Code are preeded by "Sec.".

Each section of the regulations setting orth law or regulations is designated y a number composed of the part numer followed by a decimal point (25.) nd the number of the corresponding ection of the Internal Revenue Code. n the case of a section setting forth egulations, this designation is followed y a hyphen (-) and a number identifyng such section. By use of these desigations one can ascertain the sections of

the regulations relating to a provision of the Code. Thus, the section of the regulations setting forth section 2521 of the Internal Revenue Code is designated § 25.2521 and the regulations pertaining to section 2521 are designated § 25.2521-1.

[T.D. 6334, 23 F.R. 8904, Nov. 15, 1958, as amended by T.D. 6542, 26 FR. 548, Jan. 20, 1961; T.D. 7238, 37 F.R. 28725, Dec. 29, 1972]

DETERMINATION OF TAX LIABILITY

§ 25.2501 Statutory provisions; imposition of tax.

SEC. 2501. Imposition of tax-(a) Taxable transfers-(1) General rule. For the first calendar quarter of calendar year 1971 and each calendar quarter thereafter a tax, computed as provided in section 2502, is hereby imposed on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident.

(2) Transfers of intangible property. Except as provided in paragraph (3), paragraph (1) shall not apply to the transfer of intangible property by a nonresident not a citizen of the United States.

(3) Exceptions. Paragraph (2) shall not apply in the case of a donor who at any time after March 8, 1965, and within the 10-year period ending with the date of transfer lost United States citizenship unless

(A) Such donor's loss of United States citizenship resulted from the application of section 301 (b), 350, or 355 of the Immigration and Naturalization Act, as amended (8 U.S.C. 1401 (b), 1482, or 1487), or

(B) Such loss did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A.

(4) Burden of proof. If the Secretary or his delegate establishes that it is reasonable to believe that an individual's loss of United States citizenship would, but for paragraph (3), result in a substantial reduction for the calendar quarter in the taxes on the transfer of property by gift, the burden of proving that such loss of citizenship did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A shall be on such individual.

(b) Certain residents of possessions considered citizens of the United States. A donor who is a citizen of the United States and a resident of a possession thereof shall, for purposes of the tax imposed by this chapter, be considered a "citizen" of the United States within the meaning of that term wherever used in this title unless he acquired his United States citizenship solely by reason of (1) his being a citizen of such possession of the United States, or (2) his birth or residence within such possession of the United States.