Tennessee Code Annotated

Title 67: Taxes and Licenses

Chapter 8: Transfer Taxes

Part 1: Gift Tax

TCA 67-8-101: Taxable transfers.

(a) (1) Except as otherwise provided by subdivision (a)(2), a tax is imposed upon the transfer by gift during any calendar year by any person of the following property, or any interest therein:

(A) When the transfer is from a resident of this state:

(i) Real property situated within this state;

(ii) Tangible personal property, except such as has an actual situs without this state;

(iii) All intangible personal property; and

(B) When the transfer is from a nonresident of this state:

(i) Real property situated within this state; and

(ii) Tangible personal property that has an actual situs within this state.

(2) No tax shall be imposed upon the transfer by gift made by any person on or after January 1, 2012; provided, however, this subdivision (a)(2) shall not be construed to absolve any taxpayer of liability for any tax duly imposed by this section, during any tax year that began prior to January 1, 2012.

(b) Property in which a person holds a qualifying income interest for life, which is included for taxation pursuant to subsection (e), shall be treated as a taxable transfer of such property by such person.

(c) The tax shall apply whether a gift is in trust or otherwise, and whether the gift is direct or indirect. The relinquishment or termination, other than by the donor's death, of any power to revest in the donor the property theretofore transferred by the donor shall be considered to be a transfer by the donor by gift of the property, subject to such power and shall be taxable under this part, and any payment of the income from the property to a beneficiary other than the donor shall be considered to be a transfer by the donor of such income by gift and shall be taxable under this part.

(d) Where a donor transfers an unqualified and unrestricted gift to a person in trust, such a transfer is a gift of a present interest where the trust instrument provides that the beneficiary has the power to demand immediate possession and enjoyment of such gift in the calendar year in which such gift is given, and contains provisions to notify such beneficiary of the right to make such demand. Where the beneficiaries of such trust are minors, or otherwise lack the capacity to make legally binding agreements, the parent or parents, other than the settlor of such trust, may exercise the right to demand possession and enjoyment in the calendar year in which the gift is given as natural guardian for and on behalf of such minor or other such beneficiary, even though such parent or parents may be a party to the trust instrument.

(e) (1) Any disposition of all or part of a "qualifying income interest for life," as defined in SC 2056(b)(7)(B)(ii) of the Internal Revenue Code, codified in 26 U.S.C. SC 2056(b)(7)(B)(ii), in any property to which this subsection (e) applies shall be treated as a transfer of such property.

(2) This subsection (e) applies to any property, if a deduction was allowed with respect to the transfer of such property to the donor:

(A) Under SC 67-8-315(a)(6) by reason of its incorporation of SC 2056(b)(7) of the Internal Revenue Code, codified in 26 U.S.C. SC 2056(b)(7); or

(B) Under SC 67-8-105(a) by reason of its incorporation of SC 2523(f) of the Internal Revenue Code, codified in 26 U.S.C. SC 2523(f).

(3) For purposes of taxation under this subsection (e), the classification of beneficiaries provided for by SC 67-8-102 shall be determined by reference to the relationship of the beneficiaries of the remainder interest named in the instrument to the decedent or person creating such remainder interest.

(f) Transfers for educational expenses or medical expenses that are not treated as a transfer of property by gift pursuant to SC 2503(e) of the Internal Revenue Code, codified in 26 U.S.C. SC 2503(e), shall not be treated as a transfer of property by gift for purposes of this part.

(g) Where property is transferred for less than an adequate and full consideration in money or money's worth, then the amount by which the value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.

(h) If a person who would otherwise be the recipient of property by gift, inheritance or other gratuitous transfer disclaims all or part of the property in accordance with SC 31-1-103, such disclaimer shall not cause the disclaimant to be treated as having made a taxable transfer under this section.

History: Acts 1939, ch. 137, SCSC 1, 2, 4, 6; C. Supp. 1950, SCSC 1295.1, 1295.2, 1295.4, 1295.6 (Williams, SCSC 1328.1, 1328.2, 1328.4, 1328.6); Acts 1965, ch. 19, SC 1; 1977, ch. 463, SC 1; 1978, ch. 731, SC 17; 1980, ch. 759, SC 1; 1983, ch. 73, SCSC 9-11; T.C.A. (orig. ed.), SCSC 67-2501, 67-2502, 67-2504, 67-2505(c); Acts 1986, ch. 705, SC 2; 2012, ch. 1085, SC 1.