US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 2036

Transfers with retained life estate

(a)

General rule

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 (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death—
(1)
the possession or enjoyment of, or the right to the income from, the property, or
(2)
the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom.
(b)

Voting rights

(1)

In general

For purposes of subsection (a)(1), the retention of the right to vote (directly or indirectly) shares of stock of a controlled corporation shall be considered to be a retention of the enjoyment of transferred property.

(2)

Controlled corporation

For purposes of paragraph (1), a corporation shall be treated as a controlled corporation if, at any time after the transfer of the property and during the 3-year period ending on the date of the decedent’s death, the decedent owned (with the application of section 318), or had the right (either alone or in conjunction with any person) to vote, stock possessing at least 20 percent of the total combined voting power of all classes of stock.

(3)

Coordination with section 2035

For purposes of applying section 2035 with respect to paragraph (1), the relinquishment or cessation of voting rights shall be treated as a transfer of property made by the decedent.

(c)

Limitation on application of general rule

46 Stat. 1516This section shall not apply to a transfer made before ; nor to a transfer made after , and before , unless the property transferred would have been includible in the decedent’s gross estate by reason of the amendatory language of the joint resolution of ().

Aug. 16, 1954, ch. 73668A Stat. 382Pub. L. 87–834, § 18(a)(2)(D)76 Stat. 1052Pub. L. 94–455, title XX, § 2009(a)90 Stat. 1893Pub. L. 95–600, title VII, § 702(i)(1)92 Stat. 2931Pub. L. 100–203, title X, § 10402(a)101 Stat. 1330–431Pub. L. 100–647, title III, § 3031(a)(1)102 Stat. 3634–3638Pub. L. 101–508, title XI, § 11601(a)104 Stat. 1388–490(, ; , , ; , , ; , (2), , ; , , ; , (b)–(e), (g), , ; , , .)

Editorial Notes

Amendments

Pub. L. 101–5081990—Subsecs. (c), (d). redesignated subsec. (d) as (c) and struck out former subsec. (c) which enunciated a rule that retention of retained interest would be considered to be a retention of enjoyment of transferred property if a person held a substantial interest in an enterprise, and such person in effect transferred after , property having a disproportionately large share of the potential appreciation in such person’s interest in the enterprise while retaining an interest in the income of, or rights in, the enterprise.

Pub. L. 100–647, § 3031(e)1988—Subsec. (c)(1)(B). , substituted “an interest” for “a disproportionately large share” after “whole retaining”.

Pub. L. 100–647, § 3031(g)(1)Subsec. (c)(2). , substituted “consideration furnished by” for “sales to” in heading, and amended text generally. Prior to amendment, text read as follows: “The exception contained in subsection (a) for a bona fide sale shall not apply to a transfer described in paragraph (1) if such transfer is to a member of the transferor’s family.”

Pub. L. 100–647, § 3031(d)Subsec. (c)(3)(C). , substituted “Except as provided in regulations, an” for “An”.

Pub. L. 100–647, § 3031(a)(1)Subsec. (c)(4). , amended par. (4) generally, substituting provisions relating to treatment of certain transfers for provisions relating to coordination with section 2035.

Pub. L. 100–647, § 3031(g)(2)Subsec. (c)(5). , amended par. (5) generally, substituting provisions relating to the making of appropriate adjustments in amounts included in gross estate for provisions relating to coordination with section 2043.

Pub. L. 100–647, § 3031(b)Subsec. (c)(6). , added par. (6).

Pub. L. 100–647, § 3031(b)[(c)]Subsec. (c)(7), (8). , added pars. (7) and (8).

Pub. L. 100–2031987—Subsecs. (c), (d). added subsec. (c) and redesignated former subsec. (c) as (d).

Pub. L. 95–600, § 702(i)(2)1978—Subsec. (a). , struck out provision following par. (2) relating to the retention of voting rights in retained stock.

Pub. L. 95–600, § 702(i)(1)Subsecs. (b), (c). , added subsec. (b) and redesignated former subsec. (b) as (c).

Pub. L. 94–4551976—Subsec. (a). provided that, for purposes of par. (1), the retention of voting rights in retained stock be considered to be a retention of the enjoyment of that stock.

Pub. L. 87–8341962—Subsec. (a). struck out provisions which excepted real property situated outside of the United States.

Statutory Notes and Related Subsidiaries

Effective Date of 1990 Amendment

Pub. L. 101–508, title XI, § 11601(c)104 Stat. 1388–491

“The amendments made by this section [amending this section and sections 2207B and 2501 of this title] shall apply in the case of property transferred after .”
, , , provided that:

Effective Date of 1988 Amendment

Pub. L. 100–647, title III, § 3031(h)102 Stat. 3639

“(1)

In general .—

section 2207B of this titlesection 2501 of this titlePub. L. 100–203, title XExcept as provided in this subsection, any amendment made by this section [enacting and amending this section and ] shall take effect as if included in the provisions of the Revenue Act of 1987 [] to which such amendment relates.
“(2)

Subsection (a).—

section 2501 of this titleThe amendments made by subsection (a) [amending this section and ] shall apply in cases where the transfer referred to in section 2036(c)(1)(B) of the 1986 Code is on or after .
“(3)

Subsection (f).—

section 2207B of this titleIf an amount is included in the gross estate of a decedent under section 2036 of the 1986 Code other than solely by reason of section 2036(c) of the 1986 Code, the amendments made by subsection (f) [enacting ] shall apply to such amount only with respect to property transferred after the date of the enactment of this Act [].
“(4)

Correction period .—

If section 2036(c)(1) of the 1986 Code would (but for this paragraph) apply to any interest arising from a transaction entered into during the period beginning after , and ending before , such section shall not apply to such interest if—
“(A)
during such period, such actions are taken as are necessary to have such section 2036(c)(1) not apply to such transaction (and any such interest), or
“(B)
the original transferor and his spouse on (or, if earlier, the date of the original transferor’s death), does not hold any interest in the enterprise involved.
“(5)

Clarification of effective date .—

Pub. L. 100–203For purposes of section 10402(b) of the Revenue Act of 1987 [, set out as an Effective Date of 1987 Amendment note below], with respect to property transferred on or before —
“(A)
any failure to exercise a right of conversion,
“(B)
any failure to pay dividends, and
“(c)
[sic] failures to exercise other rights specified in regulations,
shall not be treated as a subsequent transfer.”
, , , provided that:

Effective Date of 1987 Amendment

Pub. L. 100–203, title X, § 10402(b)101 Stat. 1330–432

“The amendment made by subsection (a) [amending this section] shall apply with respect to estates of decedents dying after , but only in the case of property transferred after .”
section 3031(h)(5) of Pub. L. 100–647, , , provided that: [For clarification of this note, see , set out as an Effective Date of 1988 Amendment note above.]

Effective Date of 1978 Amendment

Pub. L. 95–600, title VII, § 702(i)(3)92 Stat. 2931

“The amendments made by this subsection [amending this section] shall apply to transfers made after .”
, , , provided that:

Effective Date of 1976 Amendment

Pub. L. 94–455, title XX, § 2009(e)(1)90 Stat. 1896

“The amendment made by subsection (a) [amending this section] shall apply to transfers made after .”
, , , provided that:

Effective Date of 1962 Amendment

Pub. L. 87–834section 18(b) of Pub. L. 87–834section 2031 of this titleAmendment by applicable to estates of decedents dying after , except as otherwise provided, see , set out as a note under .