§ 105-188 (Repealed effective January 1, 2009) Gift taxes; classification of beneficiaries; exemptions; rates of tax. - North Carolina Statutes

Article 6.

Gift Taxes.

§ 105‑188.  (Repealedeffective January 1, 2009) Gift taxes; classification of beneficiaries;exemptions; rates of tax.

(a)        State gift taxes,as hereinafter prescribed, are hereby levied upon the shares of the respectivebeneficiaries in all property within the jurisdiction of this State, real,personal and mixed, and any interest therein which shall in any one calendaryear pass by gift made after March 24, 1939.

(b)        The taxes shallapply whether the gift is in trust or otherwise and whether the gift is director indirect. In the case of a gift made by a nonresident, the taxes shall applyonly if the property is within the jurisdiction of this State. The taxes shallnot apply to gifts made prior to March 24, 1939.

(c)        The tax shall notapply to the passage of property in trust where the power to revest in thedonor title to such property is vested in the donor, either alone or inconjunction with any person not having substantial adverse interest in thedisposition of such property or the income therefrom, but the relinquishment ortermination of such power (other than by the donor's death) shall be consideredto be a passage from the donor by gift of the property subject to such power,and any payment of the income therefrom to a beneficiary other than the donorshall be considered to be a passage by donor of such income by gift.

(d)        Annual Exclusion. –The annual exclusion amount is equal to the federal inflation‑adjustedexclusion amount provided in section 2503(b) of the Code. Gifts not exceeding atotal value equal to the annual exclusion amount made to any one donee in acalendar year are not taxable under this Article. When gifts exceeding a totalvalue equal to the annual exclusion amount are made to any one donee in acalendar year, only the portion of the gifts exceeding the annual exclusionamount in value is taxable under this Article. This exclusion does not apply togifts of future interests in property. For the purposes of determining theannual exclusion, no part of a gift to an individual, or in trust for anindividual, who has not attained the age of 21 years on the date of thetransfer is considered a gift of a future interest in property if the propertyand the income therefrom meet all of the following conditions: (i) they may beexpended by, or for the benefit of, the donee before the donee reaches the ageof 21 years; (ii) they will to the extent not so expended pass to the doneewhen the donee reaches the age of 21 years; and (iii) they will, in the eventthe donee dies before reaching that age, be payable to the estate of the doneeor as the donee may appoint under a general power of appointment.

When a gift is made by onespouse to a person other than the donor's spouse, the donor may claim both thedonor's annual exclusion and the spouse's annual exclusion if both spousesconsent and both spouses are residents of this State when the gift is made.Consent to share annual gift tax exclusions must be made in writing on a timelyfiled gift tax return. Once given, consent to share annual exclusions isirrevocable.

(e)        The tax shall bebased on the aggregate sum of the net gifts made by the donor to the samedonee, and shall be computed as follows:

(1)        Determine theaggregate sum of the net gifts to the donee for the calendar year and the netgifts to the same donee for each of the preceding calendar years since January1, 1948.

(2)        Compute the tax uponsaid aggregate sum by applying the rates hereinafter set out.

(3)        From the tax thuscomputed, deduct the total gift tax, if any, computed with respect to gifts tothe same donee in any prior year or years since January 1, 1948. The sum thusascertained shall be the gift tax due.

The term "net gifts"shall mean the sum of the gifts made by a donor to the same donee during any statedperiod of time in excess of the annual exclusion and the applicable specificexemption.

(f)         The rates of tax,which are based on the relationship between the donor and the donee, shall beas follows:

(1)        Where the donee isthe lineal issue, lineal ancestor, adopted child, or stepchild of the donor(for each one hundred dollars ($100.00) or fraction thereof):

First $        10,000above exemption.................................................................. 1percent

Over $       10,000and to $         25,000............................................................ 2percent

Over $       25,000and to $         50,000............................................................ 3percent

Over $       50,000and to $       100,000............................................................ 4percent

Over $     100,000and to $       200,000............................................................ 5percent

Over $     200,000and to $       500,000............................................................ 6percent

Over $     500,000and to $    1,000,000............................................................ 7percent

Over$1,000,000 and to $      1,500,000............................................................ 8percent

Over$1,500,000 and to $      2,000,000............................................................ 9percent

Over$2,000,000 and to $      2,500,000.......................................................... 10percent

Over$2,500,000 and to $      3,000,000.......................................................... 11percent

Over$3,000,000............................................................................................. 12percent

(2)        Where the donee isthe brother or sister, or descendant of the brother or sister, or is the uncleor aunt by blood of the donor (for each one hundred dollars ($100.00) orfraction thereof):

First $          5,000............................................................................................. 4percent

Over $         5,000and to $         10,000............................................................ 5percent

Over $       10,000and to $         25,000............................................................ 6percent

Over $       25,000and to $         50,000............................................................ 7percent

Over $       50,000and to $       100,000............................................................ 8percent

Over $     100,000and to $       250,000.......................................................... 10percent

Over $     250,000and to $       500,000.......................................................... 11percent

Over $     500,000and to $    1,000,000.......................................................... 12percent

Over$1,000,000 and to $      1,500,000.......................................................... 13percent

Over$1,500,000 and to $      2,000,000.......................................................... 14percent

Over$2,000,000 and to $      3,000,000.......................................................... 15percent

Over$3,000,000............................................................................................. 16percent

(3)        Where the donee isin any other degree of relationship than is hereinbefore stated, or shall be astranger in blood to the donor, or shall be a body politic or corporate (foreach one hundred dollars ($100.00) or fraction thereof):

First $        10,000............................................................................................. 8percent

Over $       10,000and to $         25,000............................................................ 9percent

Over $       25,000and to $         50,000.......................................................... 10percent

Over $       50,000and to $       100,000.......................................................... 11percent

Over $     100,000and to $       250,000.......................................................... 12percent

Over $     250,000and to $       500,000.......................................................... 13percent

Over $     500,000and to $    1,000,000.......................................................... 14percent

Over$1,000,000 and to $      1,500,000.......................................................... 15percent

Over$1,500,000 and to $      2,500,000.......................................................... 16percent

Over$2,500,000............................................................................................. 17percent

(g)        A donor is entitledto a total exemption of one hundred thousand dollars ($100,000) to be deductedfrom gifts made to donees named in subdivision (f)(1), less the sum of amountsclaimed and allowed as an exemption in prior calendar years. The exemption, atthe option of the donor, may be taken in its entirety in a single year or maybe spread over a period of years. When this exemption has been exhausted, nofurther exemption is allowable. When the exemption or any part of the exemptionis applied to gifts to more than one donee in any one calendar year, theexemption shall be apportioned against the gifts in the same ratio as the grossvalue of the gifts to each donee is to the total value of all the gifts made inthe calendar year. No exemption is allowed a donor for gifts made to doneesnamed in subdivision (f)(2) or (f)(3).

(h)        It is expresslyprovided, however, that the tax levied in this Article shall not apply to somuch of said property as shall so pass exclusively:

(1)        For state, county ormunicipal purposes within this State;

(2)        To or for theexclusive benefit of charitable, educational, or religious organizationslocated within this State, no part of the net earnings of which inures to thebenefit of any private shareholder or individual;

(3)        To or for theexclusive benefit of charitable, religious and educational corporations,foundations and trusts, not conducted for profit, incorporated or created oradministered under the laws of any other state, when such other state levies nogift taxes upon property similarly passing from residents of such state tocharitable, educational or religious corporations, foundations and trustsincorporated or created or administered under the laws of this State, or whensuch corporation, foundation or trust receives and disburses funds donated inthis State for religious, charitable and educational purposes; or

(4)        To one spouse fromthe other spouse.

(i)         The tax does notapply to tuition payments made on behalf of an individual to an educationalinstitution or to medical payments made on behalf of an individual to aprovider of medical care, as defined in the Code for the care of that individual.The term "educational institution" includes only those institutionsthat normally maintain a regular faculty and curriculum and normally have aregularly organized body of students in attendance where the educationalactivities are conducted.

(j)         The tax does notapply to property transferred to a spouse when the transfer of the property isexempt from federal estate and gift taxes under section 2523(f) of the Codebecause it is considered qualified terminable interest property.

(k)        Qualified TuitionPrograms. – The provisions of section 529(c)(2) and (5) of the Code apply tothis Article. If a donor elects to take a contribution into account ratablyover a five‑year period as provided in section 529(c)(2) of the Code,that election applies for the purposes of this Article. (1939, c. 158, s. 600; 1943,c. 400, s. 7; 1945, c. 708, s. 7; 1947, c. 501, s. 6; 1957, c. 1340, s. 6;1973, c. 505; c. 1287, s. 9; 1983, c. 685, s. 1; 1983 (Reg. Sess., 1984), c.1023, s. 1; c. 1024; 1985, c. 86; c. 656, ss. 4‑6; 1989 (Reg. Sess.,1990), c. 814, s. 24; 1991 (Reg. Sess., 1992), c. 1007, s. 5; 1996, 2nd Ex.Sess., c. 13, s. 6.3; 1998‑98, s. 63; 1998‑171, s. 4; 2002‑126,s. 30C.5(a); 2008‑107, s. 28.18(a).)