Chap. 118.—An ACT to amend and re-enact Sections 98 and 120-1 of the Tax
Code of Virginia, as heretofore amended, in relation to inheritance and gift
B

taxes, respectively. IS B 157)
Approved March 1, 1940

1. Be it enacted by the General Assembly of Virginia, That
sections ninety-eight and one hundred and twenty hyphen one of the
Tax Code of Virginia, as heretofore amended, be amended and re-
enacted so as to read as follows:

Section 98. Inheritance Taxes; Classification of Beneficiaries
Exemptions; Rates of Tax.—State inheritance taxes, as hereinafter
prescribed, are hereby levied upon the shares of the respective bene-
ficiaries in all property within the jurisdiction of this Commonwealth.
real, personal and mixed, and any interest therein, which shall pass:

(a) By will, or by the laws regulating descents and distributions

(b) By grant or gift made or intended to take effect in possessior
or enjoyment at or after the death of the grantor or donor;

(c) By grant or gift made in contemplation of death;

(d) By a transfer under which the transferrer has retained fos
his life the possession or enjoyment of the property, or the income
therefrom, or the right to designate or change the beneficiaries wh«
shall be entitled to possess or enjoy the property or the income there
from;

(e) By virtue of the fact that it is held by the decedent anc
another as joint tenants with the right of survivorship under th
provisions of section fifty-one hundred and sixty of the Code of
Virginia, or is deposited with any person, firm or corporation doing
a banking business, in their joint names and payable to either or the
survivor, except such part thereof as may be shown to have originally
belonged to such other person and never to have been received or
acquired by the latter from the decedent for less than an adequate
and full consideration in money or money’s worth; provided, that
where such property or any part thereof or any part of the considera-
tion with which such property was acquired, is shown to have been
at any time acquired by such other person from the decedent for less
than an adequate and full consideration in money or money’s worth,
there shall be excepted only such part of the value of such property
as 1S proportionate to the consideration furnished by such other
person.

Every grant or gift made within one year next preceding the date
of the death of the grantor or donor, shall be deemed prima facie to
have been made in contemplation of death.

For the purposes of this chapter, the classification of beneficiaries,
their exemptions and the rates of taxation, shall be as follows:

The father, mother, grandfathers, grandmothers, husband, wife,
children by blood or by legal adoption, grandchildren, and all other
lineal ancestors and lineal descendants of the descendant shall con-
stitute class A;

So much of such property as has the actual value of five thousand
dollars and so passes to or for the use of any class A beneficiary shall
be exempt from taxation hereunder;

So much of such property as shall so pass to or for the use of a
class A beneficiary shall be subject to a tax of one per centum of
the actual value of so much thereof as is in excess of five thousand
dollars and is not in excess of fifty thousand dollars, to a tax of two
per centum upon so much thereof as is in excess of fifty thousand
dollars and is not in excess of one hundred thousand dollars, to a tax
of three per centum upon so much thereof as is in excess of one hun-
dred thousand dollars and is not in excess of five hundred thousand
dollars, and to a tax of four per centum upon so much thereof as is
in excess of five hundred thousand dollars and is not in excess of one
million dollars, and to a tax of five per centum upon all in excess of
one million dollars.

The brothers, sisters, nephews and nieces of the whole or half
blood of the decedent shall constitute class B; |

So much of such property as has the actual value of two thousand
dollars and so passes to or for the use of any class B beneficiary shall
be exempt from taxation hereunder;

So much of such property as shall so pass to or for the use of a
class B beneficiary shall be subject to a tax of two per centum of
the actual value of so much thereof as is in excess of two thousand
dollars and is not in excess of twenty-five thousand dollars, to a tax
of four per centum upon so much thereof as is in excess of twenty-five
thousand dollars and is not in excess of fifty thousand dollars, to a
tax of six per centum upon so much thereof as is in excess of fifty
thousand dollars and is not in excess of one hundred thousand dollars,
to a tax of eight per centum upon so much thereof as is in excess of
one hundred thousand dollars and is not in excess of five hundred
thousand dollars, and to a tax of ten per centum upon all in excess of
five hundred thousand dollars;

Grand-nephews and grand-nieces of the decedent and all persons
other than members of classes A and B and all firms, institutions,
associations, and corporations shall constitute class C;

So much of such property as has the actual value of one thousand
dollars and so passes to or for the use of any class C beneficiary shall
be exempt from taxation hereunder;

So much of such property as shall so pass to or for the use of a
class C beneficiary shall be subject to a tax of five per centum of the
actual value of so much thereof as is in excess of one thousand dollars
and is not in excess of twenty-five thousand dollars, to a tax of seven
per centum upon so much thereof as is in excess of twenty-five thou-
sand dollars and is not in excess of fifty thousand dollars, to a tax of
nine per centum upon so much thereof as is in excess of fifty thousand
dollars and is not in excess of one hundred thousand dollars, to a
tax of twelve per centum upon so much thereof as is in excess of one
hundred thousand dollars and is not in excess of five hundred thou-
sand dollars, and to a tax of fifteen per centum upon all in excess of
five hundred thousand dollars; ,

It is expressly provided, however, that so much of such property
as shall so pass to or for the use of: (A) The United States, any state,
territory, or any political sub-division thereof, or the District of
Columbia, for exclusively public purposes; (B) any corporation, or
trust, or community chest, fund, or foundation, organized and op-
erated exclusively for religious, charitable, scientific, literary, or
educational purposes, or for the prevention of cruelty to children or
animals, no part of the net earnings of which inures to the benefit of
any private shareholder or individual; (C) the special fund for voca-
tional rehabilitation authorized by section seven of the Federal
Vocational Rehabilitation Act; (D) posts or organizations of war
veterans, or auxiliary units or societies of any such posts or organi-
zations, if such posts, organizations, units, or societies are organized
in the United States or any of its possessions, and if no part of their
net earnings inures to the benefit of any private shareholder or indi-
vidual; or (E) a fraternal society, order, or association, operating
under the lodge system, shall be exempt from any and all taxation
under the provisions of this chapter.

The tax aforesaid shall be determined upon the aggregate actual
value at the time of the death of the decedent of all property within
the jurisdiction of the Commonwealth as aforesaid, which shall so
pass from the decedent to each beneficiary by any number or all of
such methods of transmission;

Where any class A, class B or class C beneficiary has died or may
hereafter die within one year after the death of the decedent and
before coming into the possession and enjoyment of any property
passing to him, and before selling, assigning, transferring or in any
manner contracting with respect to his interests in such property,
and the tax on the property so passing to said beneficiary has not
been paid, then such property shall be taxed only once and the tax
shall be assessed on the property received from such share by each
beneficiary thereof, finally entitled to the possession and enjoyment
thereof, as if he had been the original beneficiary, and the exemptions
and rates of taxation shall be governed by the respective relationship
of each of the ultimate beneficiaries to the first decedent.

The provisions of this section, as hereby amended, shall apply to
the estate of every person who shall die after this section, as hereby
amended, takes effect, and to all estates created by will which shall
vest in interest on or after said date; and the provisions of this section
shall apply to all estates of deceased persons which shall come into
possession of beneficiaries by the exercise or relinquishment of powers
after this section takes effect.

Section 120-1. Gift Taxes; Classification of Beneficiaries; Exemp-
tions; Rates of Tax.—State gift taxes, as hereinafter prescribed, are
hereby levied upon the shares of the respective beneficiaries in all
property within the jurisdiction of this Commonwealth, real, per-
sonal and mixed, and any interest therein, which shall in any one
calendar year pass by gift made after the effective date of this act.

The taxes shall apply whether the gift is in trust or otherwise
and whether the gift is direct or indirect. In the case of a gift made
by a nonresident, the taxes shall apply only if the property is within
the jurisdiction of this State. The taxes shall not apply to gifts
made prior to the effective date of this act.

The tax shall not apply to the passage of property in trust where
the power to revest in the donor title to such property is vested in
the donor, either alone or in conjunction with any person not having
substantial adverse interest in the disposition of such property or
the income therefrom, but the relinquishment or termination of such
power (other than by the donor’s death) shall be considered to be a
passage from the donor by gift of the property subject to such power,
and any payment of the income therefrom to a beneficiary other than
the donor shall be considered to be a passage by donor of such income
by gift.

For the purposes of this chapter, the classification of beneficiaries,
their exemptions and the rates of taxation, shall be as follows:

The father, mother, grandfathers, grandmothers, husband, wife,
children by blood or by legal adoption, grandchildren, and all other
lineal ancestors and lineal descendants of the donor shall constitute
class A;

So much of such property as has the actual value of five thousand
dollars and so passes to or for the use of any class A beneficiary shall
be exempt from taxation hereunder;

So much of such property as shall so pass to or for the use of a
class A beneficiary shall be subject to a tax of one per centum of the
actual value of so much thereof as is in excess of five thousand dollars
and is not in excess of fifty thousand dollars, to a tax of two per
centum upon so much thereof as is in excess of fifty thousand dollars
and is not in excess of one hundred thousand dollars, to a tax of
three per centum upon so much thereof as is in excess of one hundred
thousand dollars and is not in excess of five hundred thousand dollars,
and to a tax of four per centum upon so much thereof as is in excess
of five hundred thousand dollars and is not in excess of one million
dollars, and to a tax of five per centum upon all in excess of one
million dollars.

The brothers, sisters, nephews and nieces of the whole or half
blood of the donor shall constitute class B;

So much of such property as has the actual value of two thousand
dollars and so passes to or for the use of any class B beneficiary shall
be exempt from taxation hereunder; . |

So much of such property as shall so pass to or for the use of a
class B beneficiary shall be subject to a tax of two per centum of the
actual value of so much thereof as is in excess of two thousand dollars
and is not in excess of twenty-five thousand dollars, to a tax of four
per centum upon so much thereof as is in excess of twenty-five thou-
sand dollars and is not in excess of fifty thousand dollars, to a tax of
six per centum upon so much thereof as is in excess of fifty thousand
dollars and is not in excess of one hundred thousand dollars, to a
tax of eight per centum upon so much thereof as is in excess of one
hundred thousand dollars and is not in excess of five hundred thou-
sand dollars, and to a tax of ten per centum upon all in excess of
five hundred thousand dollars;

Grand-nephews and grand-nieces of the donor and all persons
other than members of classes A and B and all firms, institutions,
associations, and corporations shall constitute class C;

So much of such property as has the actual value of one thousand
dollars and so passes to or for the use of any class C beneficiary shall
be exempt from taxation hereunder;

So much of such property as shall so pass to or for the use of any
class C beneficiary shall be subject to a tax of five per centum of the
actual value of so much thereof as is in excess of one thousand dollars
and is not in excess of twenty-five thousand dollars, to a tax of seven
per centum upon so much thereof as is in excess of twenty-five thou-
sand dollars and is not in excess of fifty thousand dollars, to a tax of
nine per centum upon so much thereof as is in excess of fifty thousand
dollars and is not in excess of one hundred thousand dollars, to a
tax of twelve per centum upon so much thereof as is in excess of one
hundred thousand dollars, and is not in excess of five hundred thousand
dollars, and to a tax of fifteen per centum upon all in excess of five
hundred thousand dollars;

It is expressly provided however, that so much of such property
as shall hereafter so pass to or for the use of: (A) The United States,
any State, Territory, or any political subdivision thereof, or the
District of Columbia, for exclusively public purposes; (B) any corpora-
tion, or trust, or community chest, fund, or foundation, organized
and operated exclusively for religious, charitable, scientific, literary,
or educational purposes, or for the prevention of cruelty to children
or animals, no part of the net earnings of which inures to the benefit
of any private shareholder or individual; (C) the special fund for
vocational rehabilitation authorized by section seven of the Federal
Vocational Rehabilitation Act; (D) posts or organizations of war
veterans, or auxiliary units or societies of any such posts or organiza-
tions, if such posts, organizations, units, or societies are organized
in the United States or any of its possessions, and if no part of their
net earnings inures to the benefit of any private shareholder or in-
dividual; or (E) a fraternal society, order, or association, operating
under the lodge system, shall be exempt from any and all taxation
under the provisions of this chapter.