Rev. Rul. 83-35

1983-1 C.B. 234, 1983-9 I.R.B. 6.

                       Internal Revenue Service
                                 Revenue Ruling

                           DISCLAIMER;  JOINT TENANCY

                            Published: Feb. 28, 1983

  Disclaimer;  joint tenancy.  A joint tenant's renunciation of an interest in property acquired by survivorship is not a qualified disclaimer for purposes of section 2518 of the Code if the survivor originally transferred the property to the joint tenancy.

ISSUE

  For purposes of section 2518 of the Internal Revenue Code, can a joint tenant make a qualified disclaimer of property acquired by survivorship within nine months after the creation of the tenancy, if the survivor originally transferred the property to the joint tenancy?

FACTS

  In November 1981, D, the donor, purchased unimproved real property and placed title in the names of D and D's sibling A, as joint tenants with right of survivorship.  A died in March 1982 and D became entitled to the entire property, as the surviving joint tenant.

  Within one month after A's death, D delivered to the executor of A's estate a written statement that D renounced any interest in the property.  As a result, the entire property passed to A's children pursuant to local law.  D contended that the written renunciation satisfied all the criteria of section 2518 for a qualified disclaimer and, therefore, D did not make a gift when the property passed to A's children.

LAW AND ANALYSIS

  Section 2501 of the Code provides that a tax is imposed on the transfer of property by gift.

  Section 2518(a) of the Code provides that, if a person makes a qualified disclaimer with respect to any interest in property, the gift tax will apply with respect to such interest as if the interest had never been transferred to such person.  Under section 2518(b), the term "qualified disclaimer" means an irrevocable and unqualified refusal by a person to accept an interest in property, provided that certain criteria are satisfied.  One requirement is that the disclaimer must be made within nine months after the transfer creating the interest.  See section 2518(b)(2)(A).

  As noted above, a disclaimer is a "qualified disclaimer" only if it is an irrevocable and unqualified refusal by a person to accept an interest.  See also H.R. Rep. No. 1380, 94th Cong., 2d Sess. 3, 67 (1976), 1976-3 Vol. 3 C.B. 735, 801.  In addition, under section 2518, if a disclaimer is qualified, the estate and gift tax laws apply to the disclaimed interest as if the interest had never been transferred to such person.  This statutory language indicates that section 2518 is applicable only if a donee or transferee disclaims an interest, because 1) a "qualified disclaimer" is an irrevocable refusal to accept an interest, and 2) only a donee or transferee can refuse acceptance. Consequently, the creator of an interest cannot thereafter disclaim the interest for purposes of section 2518.

  The survivorship rights of joint tenants arise upon the creation of the joint tenancy.  See LOWNDES, KRAMER, & MCCORD, FEDERAL ESTATE AND GIFT TAXES 269 (3d ed. 1974).  Consequently, since the survivorship rights are transferred at the creation of the joint tenancy, no transfer of such rights to the surviving joint tenant takes place upon the death of a joint tenant.

  In this situation, D executed the disclaimer within the 9 month period specified in section 2518(b)(2)(A).  However, D's survivorship rights were created when D created the joint tenancy.  Consequently, D's renunciation of the property is not a qualified disclaimer.  D made a gift of the property to A's children, under section 2501 of the Code.

HOLDING

  For purposes of section 2518 of the Code, a joint tenant cannot make a qualified disclaimer of property acquired by survivorship within nine months after creation of the tenancy, if the survivor originally created the joint tenancy, because the survivor was not a transferee of the interest renounced.

Rev. Rul. 83-35, 1983-1 C.B. 234, 1983-9 I.R.B. 6.