### Question
How does ESTATES, TRUSTS, AND BENEFICIARIES define qualified gratuitous transfer?


### Answer
Under *26 U.S.C. § 664*, **qualified gratuitous transfer** is defined as:

> a transfer of qualified employer securities to an employee stock ownership plan (as defined in section 4975(e)(7)) but only to the extent that—


(A) the securities transferred previously passed from a decedent dying before January 1, 1999, to a trust described in paragraph (1) or (2) of subsection (d),


(B) no deduction under section 404 is allowable with respect to such transfer,


(C) such plan contains the provisions required by paragraph (3),


(D) such plan treats such securities as being attributable to employer contributions but without regard to the limitations otherwise applicable to such contributions under section 404, and


(E) the employer whose employees are covered by the plan described in this paragraph files with the Secretary a verified written statement consenting to the application of sections 4978 and 4979A with respect to such employer

#### Citation:
  - *26 U.S.C. § 664*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter J-Estates, Trusts, Beneficiaries, and Decedents > PART I-ESTATES, TRUSTS, AND BENEFICIARIES > Subpart C-Estates and Trusts Which May Accumulate Income or Which Distribute Corpus**

