Treatment of transfers without adequate consideration
(i) In general
(i)In general#
If an individual who holds an annuity contract transfers it without full and adequate consideration, such individual shall be treated as receiving an amount equal to the excess of—
(I) the cash surrender value of such contract at the time of transfer, over
(II) the investment in such contract at such time,
(i)(I)#
the cash surrender value of such contract at the time of transfer, over
(i)(II)#
the investment in such contract at such time,
(ii)Exception for certain transfers between spouses or former spouses#
Clause (i) shall not apply to any transfer to which section 1041(a) (relating to transfers of property between spouses or incident to divorce) applies.
(iii)Adjustment to investment in contract of transferee#
If under clause (i) an amount is included in the gross income of the transferor of an annuity contract, the investment in the contract of the transferee in such contract shall be increased by the amount so included.