Contents

§ 8.2 FEDERAL GIFT TAXTransfers of intangible property by a nonresident who is not a citizen ofthe United States are not included, 16 unless the intangible property is stock in adomestic corporation or debt obligations of the United States, its political subdivisions,or its citizens. 17 There is a special exception in cases of lost U.S. citizenship. 18Also, the tax applies to all types of transfers, “whether the transfer is in trustor otherwise, whether the gift is direct or indirect.” 19(d) Powers of AppointmentGenerally, the exercise, release, or lapse of a general power of appointment isconsidered to be a transfer subject to the gift tax. 20 A general power of appointmentover property is the power to appoint property to oneself, one’s estate, creditors,or the creditors of that estate. 21A power to appoint property to any person or group, other than thoseincluded in the definition of a general power of appointment, is not a generalpower of appointment. 22 For example, a power limited by an ascertainable standard,or in conjunction with some other person, is not a general power. Therefore,powers to “consume, invade, or appropriate property for the benefit of thepossessor,” when limited by an ascertainable standard concerning health, education,support, or maintenance, are not general powers. 23 Further, powers exercisableonly in conjunction with the person creating the power, or a person with anadverse interest, are not considered general. 24Certain lapses are not treated as releases of general powers over property.When property can be appointed annually that does not exceed the greater of$5,000 or 5 percent of the value of the asset, the lapse of such power is not consideredto be the release of a general power over the property. This type of qualifyinglapse is not subjected to imposition of the gift tax.(e) Transfers Deemed Not to Be GiftsGifts are transfers for less than adequate consideration. Under the federal gifttax law, certain transfers are deemed to be for full and adequate consideration,and hence do not fall within the definition of a gift. These transfers are all madepursuant to a written marital property settlement agreement that meets certainother conditions. 25 A divorce must occur within a three-year period that beginsone year before the date the agreement was entered into. Further, the transfersmust be to the other spouse in settlement of marital or property rights, or to providefor child support during the minority of children born to the marriage.16 IRC § 2501(2).17 IRC § 2511(b).18 IRC § 2501(3).19 IRC § 2511(a).20 IRC § 2514.21 IRC § 2514(c).22 IRC § 2514.23 IRC § 2514(c)(1).24 IRC § 2514(c)(3)(A).25 IRC § 2516. 227