Wealth Transfer Taxation: 'Transfer' Defined

Abstract

The United States Constitution forbids a direct Federal tax on wealth. Instead, the estate, gift, and generation-skipping transfer taxes are permissible only to the extent they are imposed on “transfers” of wealth. But the term “transfer” is not defined in the Internal Revenue Code or Regulations, and it is not clear whether certain transactions or events give rise to a legitimate imposition of the Federal tax. This article provides a definition of “transfer” that does not depend on there being both a transfer or and transferee. Instead, it posits that “transfer” means that the taxpayer no longer has something, and not that any identifiable donee received it.