Skip Person [Internal Revenue] Law and Legal Definition

Pursuant to 26 CFR 26.2612-1 (d) [Title 26 Internal Revenue; Chapter I Internal Revenue Service, Department of the Treasury; Subchapter B Estate and Gift Taxes; Part 26 Generation-Skipping Transfer Tax Regulations under the Tax Reform Act of 1986], the term a Skip Person is --

“(1) An individual assigned to a generation more than one generation below that of the transferor (determined under the rules of section 2651 [26 USCS § 2651]); or

(2) A trust if --

(i) All interests in the trust are held by skip persons; or

(ii) No person holds an interest in the trust and no distributions, other than a distribution the probability of which occurring is so remote as to be negligible (including distributions at the termination of the trust), may be made after the transfer to a person other than a skip person. For this purpose, the probability that a distribution will occur is so remote as to be negligible only if it can be ascertained by actuarial standards that there is less than a 5 percent probability that the distribution will occur.”