[Not applicable to any transfer by gift made on or after January 1, 2012, see Section 67-8-118.]

(a)

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Terms Used In Tennessee Code 67-8-101

  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Decedent: A deceased person.
  • Donor: The person who makes a gift.
  • Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
  • Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
  • Minor: means any person who has not attained eighteen (18) years of age. See Tennessee Code 1-3-105
  • Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
  • Personal property: All property that is not real property.
  • Personal property: includes money, goods, chattels, things in action, and evidences of debt. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(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 § 2056(b)(7)(B)(ii) of the Internal Revenue Code (26 U.S.C. § 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 § 67-8-315(a)(6) by reason of its incorporation of § 2056(b)(7) of the Internal Revenue Code (26 U.S.C. § 2056(b)(7)); or
(B) Under § 67-8-105(a) by reason of its incorporation of § 2523(f) of the Internal Revenue Code (26 U.S.C. § 2523(f)).
(3) For purposes of taxation under this subsection (e), the classification of beneficiaries provided for by § 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 § 2503(e) of the Internal Revenue Code (26 U.S.C. § 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 [former] § 31-1-103 [repealed], such disclaimer shall not cause the disclaimant to be treated as having made a taxable transfer under this section.
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