26 CFR §25.2502-1 — -1 Rate of tax.

1. (a)Computation of tax. The rate of tax is determined by the total of all gifts made by the donor during the calendar period and all the preceding calendar periods since June 6, 1932. See § 25.2502-1(c)(1) for the definition of “calendar period” and § 25.2502-1(c)(2) for the definition of “preceding calendar periods.” The following six steps are to be followed in computing the tax:
   1. (1)First step. Ascertain the amount of the “taxable gifts” (as defined in § 25.2503-1) for the calendar period for which the return is being prepared.
   2. (2)Second step. Ascertain “the aggregate sum of the taxable gifts for each of the preceding calendar periods” (as defined in § 25.2504-1), considering only those gifts made after June 6, 1932.
   3. (3)Third step. Ascertain the total amount of the taxable gifts, which is the sum of the amounts determined in the first and second steps. See § 25.2702-6 for an adjustment to the total amount of an individual's taxable gifts where the individual's current taxable gifts include the transfer of certain interests in trust that were previously valued under the provisions of section 2702.
   4. (4)Fourth step. Compute the tentative tax on the total amount of taxable gifts (as determined in the third step) using the rate schedule in effect at the time the gift (for which the return is being filed) is made.
   5. (5)Fifth step. Compute the tentative tax on the aggregate sum of the taxable gifts for each of the preceding calendar periods (as determined in the second step), using the same rate schedule set forth in the fourth step of this paragraph (a).
   6. (6)Sixth step. Subtract the amount determined in the fifth step from the amount determined in the fourth step. The amount remaining is the gift tax for the calendar period for which the return is being prepared.
2. (b)Rate of tax. The tax is computed in accordance with the rate schedule in effect at the time the gift was made as set forth in section 2001(c) or corresponding provisions of prior law.
3. (c)Definitions.
   1. (1)The term “calendar period” means:
      1. (i)Each calendar year for the calendar years 1932 (but only that portion of such year after June 6, 1932) through 1970;
      2. (ii)Each calendar quarter for the first calendar quarter of the calendar year 1971 through the last calendar quarter of calendar year 1981; or
      3. (iii)Each calendar year for the calendar year 1982 and each succeeding calendar year.
   2. (2)The term “preceding calendar periods” means all calendar periods ending prior to the calendar period for which the tax is being computed.
4. (d)Examples. The following examples illustrate the application of this section with respect to gifts made by citizens or residents of the United States: