[Code of Federal Regulations]
[Title 26, Volume 14]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR20.2001-1]

[Page 238-239]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 20_ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 
1954--Table of Contents
 
Sec.  20.2001-1  Valuation of adjusted taxable gifts and section 2701(d)
taxable events.

    (a) Adjusted taxable gifts made prior to August 6, 1997. For 
purposes of determining the value of adjusted taxable gifts as defined 
in section 2001(b), if the gift was made prior to August 6, 1997, the 
value of the gift may be adjusted at any time, even if the time within 
which a gift tax may be assessed has expired under section 6501. This 
paragraph (a) also applies to adjustments involving issues other than 
valuation for gifts made prior to August 6, 1997.
    (b) Adjusted taxable gifts and section 2701(d) taxable events 
occurring after August 5, 1997. For purposes of determining the amount 
of adjusted taxable gifts as defined in section 2001(b), if, under 
section 6501, the time has expired within which a gift tax may be 
assessed under chapter 12 of the Internal Revenue Code (or under 
corresponding provisions of prior laws) with respect to a gift made 
after August 5, 1997, or with respect to an increase in taxable gifts 
required under section 2701(d) and Sec.  25.2701-4 of this chapter, then 
the amount of the taxable gift will be the amount as finally determined 
for gift tax purposes under chapter 12 of the Internal Revenue Code and 
the amount of the taxable gift may not thereafter be adjusted. The rule 
of this paragraph (b) applies to adjustments involving all issues 
relating to the gift, including valuation issues and legal issues 
involving the interpretation of the gift tax law.
    (c) Finally determined. For purposes of paragraph (b) of this 
section, the amount of a taxable gift as finally determined for gift tax 
purposes is--
    (1) The amount of the taxable gift as shown on a gift tax return, or 
on a statement attached to the return, if the Internal Revenue Service 
does not contest such amount before the time

[[Page 239]]

has expired under section 6501 within which gift taxes may be assessed;
    (2) The amount as specified by the Internal Revenue Service before 
the time has expired under section 6501 within which gift taxes may be 
assessed on the gift, if such specified amount is not timely contested 
by the taxpayer;
    (3) The amount as finally determined by a court of competent 
jurisdiction; or
    (4) The amount as determined pursuant to a settlement agreement 
entered into between the taxpayer and the Internal Revenue Service.
    (d) Definitions. For purposes of paragraph (b) of this section, the 
amount is finally determined by a court of competent jurisdiction when 
the court enters a final decision, judgment, decree or other order with 
respect to the amount of the taxable gift that is not subject to appeal. 
See, for example, section 7481 regarding the finality of a decision by 
the U.S. Tax Court. Also, for purposes of paragraph (b) of this section, 
a settlement agreement means any agreement entered into by the Internal 
Revenue Service and the taxpayer that is binding on both. The term 
includes a closing agreement under section 7121, a compromise under 
section 7122, and an agreement entered into in settlement of litigation 
involving the amount of the taxable gift.
    (e) Expiration of period of assessment. For purposes of determining 
if the time has expired within which a tax may be assessed under chapter 
12 of the Internal Revenue Code, see Sec.  301.6501(c)-1(e) and (f) of 
this chapter.
    (f) Effective dates. Paragraph (a) of this section applies to 
transfers of property by gift made prior to August 6, 1997, if the 
estate tax return for the donor/decedent's estate is filed after 
December 3, 1999. Paragraphs (b) through (e) of this section apply to 
transfers of property by gift made after August 5, 1997, if the gift tax 
return for the calendar period in which the gift is made is filed after 
December 3, 1999.

[T.D. 8845, 64 FR 67769, Dec. 3, 1999]