26 U.S.C. § 2653 — Taxation of multiple skips

(a) General rule. If property is transferred in a generation-skipping transfer^* and is immediately held in trust^*, later transfers from the trust portion attributable to that property are treated, for this chapter except section 2651, as though the transferor had been assigned to the first generation above the highest generation of any person who had an interest in the trust immediately after the transfer.

(b) Trust keeps its inclusion ratio. (1) Unless paragraph (2) applies, subsection (a) does not change a trust’s inclusion ratio. Regulations must nevertheless provide a proper adjustment for tax imposed on the transfer under this chapter and paid by the trust. (2)(A) If the transfer moves property from one trust to another, the receiving trust (the “pour-over trust”) determines its inclusion ratio by treating the nontax part of the distribution as though it were part of a GST exemption allocated to that trust. (B) The nontax part of a distribution equals the distribution multiplied by the applicable fraction for that distribution.