26 C.F.R. §§ 20.2011-1–20.2014-6

§20.2011-1. Credit for State death taxes.

26 C.F.R. § 20.2011-1

(a)

In general. A credit is allowed under section 2011 against the Federal estate tax for estate, inheritance, legacy or succession taxes actually paid to any State, Territory, or the District of Columbia, or, in the case of decedents dying before September 3, 1958, any possession of the United States (hereinafter referred to as “State death taxes”). The credit, however, is allowed only for State death taxes paid (1) with respect to property included in the decedent's gross estate, and (2) with respect to the decedent's estate. The amount of the credit is subject to the limitation described in paragraph (b) of this section. It is subject to further limitations described in § 20.2011-2 if a deduction is allowed under section 2053(d) for State death taxes paid with respect to a charitable gift. See paragraph (a) of § 20.2014-1 as to the allowance of a credit for death taxes paid to a possession of the United States in a case where the decedent died after September 2, 1958.

(b)

Amount of credit.

(1)

If the decedent's taxable estate does not exceed $40,000, the credit for State death taxes is zero. If the decedent's taxable estate does exceed $40,000, the credit for State death taxes is limited to an amount computed in accordance with the following table:

(2)

Subparagraph (1) of this paragraph may be illustrated by the following example:

(c)

Miscellaneous limitations and conditions to credit—

(1)

Period of limitations. The credit for State death taxes is limited under section 2011(c) to those taxes which were actually paid and for which a credit was claimed within four years after the filing of the estate tax return for the decedent's estate. If, however, a petition has been filed with the Tax Court of the United States for the redetermination of a deficiency within the time prescribed in section 6213(a), the credit is limited to those taxes which were actually paid and for which a credit was claimed within four years after the filing of the return or within 60 days after the decision of the Tax Court becomes final, whichever period is the last to expire. Similarly, if an extension of time has been granted under section 6161 for payment of the tax shown on the return, or of a deficiency, the credit is limited to those taxes which were actually paid and for which a credit was claimed within four years after the filing of the return, or before the date of the expiration of the period of the extension, whichever period is last to expire. If a claim for refund or credit of an overpayment of the Federal estate tax is filed within the time prescribed in section 6511, the credit for State death taxes is limited to such taxes as were actually paid and credit therefor claimed within four years after the filing of the return or before the expiration of 60 days from the date of mailing by certified or registered mail by the district director to the taxpayer of a notice of disallowance of any part of the claim, or before the expiration of 60 days after a decision by any court of competent jurisdiction becomes final with respect to a timely suit instituted upon the claim, whichever period is the last to expire. See section 2015 for the applicable period of limitations for credit for State death taxes on reversionary or remainder interests if an election is made under section 6163(a) to postpone payment of the estate tax attributable to reversionary or remainder interests. If a claim for refund based on the credit for State death taxes is filed within the applicable period described in this subparagraph, a refund may be made despite the general limitation provisions of sections 6511 and 6512. Any refund based on the credit described in this section shall be made without interest.

(2)

Submission of evidence. Before the credit for State death taxes is allowed, evidence that such taxes have been paid must be submitted to the district director. The district director may require the submission of a certificate from the proper officer of the taxing State, Territory, or possession of the United States, or the District of Columbia, showing: (i) The total amount of tax imposed (before adding interest and penalties and before allowing discount); (ii) the amount of any discount allowed; (iii) the amount of any penalties and interest imposed or charged; (iv) the total amount actually paid in cash; and (v) the date or dates of payment. If the amount of these taxes has been redetermined, the amount finally determined should be stated. The required evidence should be filed with the return, but if that is not convenient or possible, then it should be submitted as soon thereafter as practicable. The district director may require the submission of such additional proof as is deemed necessary to establish the right to the credit. For example, he may require the submission of a certificate of the proper officer of the taxing jurisdiction showing (vi) whether a claim for refund of any part of the State death tax is pending and (vii) whether a refund of any part thereof has been authorized, and if a refund has been made, its date and amount, and a description of the property or interest in respect of which the refund was made. The district director may also require an itemized list of the property in respect of which State death taxes were imposed certified by the officer having custody of the records pertaining to those taxes. In addition, he may require the executor to submit a written statement (containing a declaration that it is made under penalties of perjury) stating whether, to his knowledge, any person has instituted litigation or taken an appeal (or contemplates doing so), the final determination of which may affect the amount of those taxes. See section 2016 concerning the redetermination of the estate tax if State death taxes claimed as credit are refunded.

(d)

Definition of “basic estate tax”. Section 2011(d) provides definitions of the terms “basic estate tax” and “additional estate tax”, used in the Internal Revenue Code of 1939, and “estate tax imposed by the Revenue Act of 1926”, for the purpose of supplying a means of computing State death taxes under local statutes using those terms, and for use in determining the exemption provided for in section 2201 for estates of certain members of the Armed Forces. See section 2011(e)(3) for a modification of these definitions if a deduction is allowed under section 2053(d) for State death taxes paid with respect to a charitable gift.

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6526, 26 FR 414, Jan. 19, 1961]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6526, 26 FR 414, Jan. 19, 1961]

§20.2011-2. Limitation on credit if a deduction for State death taxes is allowed under section 2053(d).

26 C.F.R. § 20.2011-2

If a deduction is allowed under section 2053(d) for State death taxes paid with respect to a charitable gift, the credit for State death taxes is subject to special limitations. Under these limitations, the credit cannot exceed the least of the following:

(a)

The amount of State death taxes paid other than those for which a deduction is allowed under section 2053(d);

(b)

The amount indicated in section 2011(b) to be the maximum credit allowable with respect to the decedent's taxable estate; or

(c)

An amount, A, which bears the same ratio to B (the amount which would be the maximum credit allowable under section 2011(b) if the deduction under section 2053(d) for State death taxes were not allowed in computing the decedent's taxable estate) as C (the amount of State death taxes paid other than those for which a deduction is allowed under section 2053(d)) bears to D (the total amount of State death taxes paid). For the purpose of this computation, in determining what the decedent's taxable estate would be if the deduction for State death taxes under section 2053(d) were not allowed, adjustment must be made for the decrease in the deduction for charitable gifts under section 2055 or 2106(a)(2) (for estates of nonresidents not citizens) by reason of any increase in Federal estate tax which would be charged against the charitable gifts.

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6600, 27 FR 4983, May 29, 1962]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6600, 27 FR 4983, May 29, 1962]

§20.2012-1. Credit for gift tax.

26 C.F.R. § 20.2012-1

(a)

In general. With respect to gifts made before 1977, a credit is allowed under section 2012 against the Federal estate tax for gift tax paid under chapter 12 of the Internal Revenue Code, or corresponding provisions of prior law, on a gift by the decedent of property subsequently included in the decedent's gross estate. The credit is allowable even though the gift tax is paid after the decedent's death and the amount of the gift tax is deductible from the gross estate as a debt of the decedent.

(b)

Limitations on credit. The credit for gift tax is limited to the smaller of the following amounts:

(1)

The amount of gift tax paid on the gift computed as set forth in paragraph (c) of this section, or

(2)

The amount of the estate tax attributable to the inclusion of the gift in the gross estate, computed as set forth in paragraph (d) of this section.

(c)

“First limitation”. The amount of the gift tax paid on the gift is the “first limitation”. Thus, if only one gift was made during a certain calendar quarter, or calendar year if the gift was made before January 1, 1971, and the gift is wholly included in the decedent's gross estate for the purpose of the estate tax, the credit with respect to the gift is limited to the amount of the gift tax paid for that calendar quarter or calendar year. On the other hand, if more than one gift was made during a certain calendar quarter or calendar year, the credit with respect to any such gift which is included in the decedent's gross estate is limited under section 2012(d) to an amount, A, which bears the same ratio to B (the total gift tax paid for that calendar quarter or calendar year) as C (the “amount of the gift,” computed as described below) bears to D (the total taxable gifts for the calendar quarter or the calendar year, computed without deduction of the gift tax specific exemption). Stated algebraically, the “first limitation” (A) equals:

(d)

“Second limitation”.

(1)

The amount of the estate tax attributable to the inclusion of the gift in the gross estate is the “second limitation”. Thus, the credit with respect to any gift of property included in the gross estate is limited to an amount, E, which bears the same ratio to F (the gross estate tax, reduced by any credit for State death taxes under section 2011) as G (the “value of the gift”, computed as described in subparagraph (2) of this paragraph) bears to H (the value of entire gross estate, reduced by the total deductions allowed under sections 2055 or 2106(a)(2) (charitable deduction) and 2056 (marital deduction)). Stated algebraically, the “second limitation” (E) equals:

(2)

For purposes of the ratio stated in subparagraph (1) of this paragraph, the “value of the gift” referred to as factor “G” is the value of the property transferred by gift and included in the gross estate, as determined for the purpose of the gift tax or for the purpose of the estate tax, whichever is lower, and adjusted as follows:

(i)

The appropriate value is reduced by all or a portion of any annual exclusion allowed for gift tax purposes under section 2503(b) of the Internal Revenue Code or corresponding provisions of prior law. If the gift tax value is lower than the estate tax value, it is reduced by the entire amount of the exclusion. If the estate tax value is lower than the gift tax value, it is reduced by an amount which bears the same ratio to the estate tax value as the annual exclusion bears to the total value of the property as determined for gift tax purposes. To illustrate: In 1955, a donor, in contemplation of death, transferred certain property to his five children which was valued at $300,000, for the purpose of the gift tax. Thereafter, the same property was included in his gross estate at a value of $270,000. In computing his gift tax, the donor was allowed annual exclusions totalling $15,000. The reduction provided for in this subdivision is:

(ii)

The appropriate value is further reduced if any portion of the value of the property is allowed as a marital deduction under section 2056 or as a charitable deduction under section 2055 or section 2106(a)(2) (for estates of nonresidents not citizens). The amount of the reduction is an amount which bears the same ratio to the value determined under subdivision (i) of this subparagraph as the portion of the property allowed as a marital deduction or as a charitable deduction bears to the total value of the property as determined for the purpose of the estate tax. Thus, if a gift is made solely to the decedent's surviving spouse and is subsequently included in the decedent's gross estate as having been made in contemplation of death, but a marital deduction is allowed under section 2056 for the full value of the gift, no credit for gift tax on the gift will be allowed since the reduction under this subdivision together with the reduction under subdivision (i) of this subparagraph will have the effect of reducing the factor “G” of the ratio in subparagraph (1) of this paragraph to zero.

(e)

Credit for “split gifts”. If a decedent made a gift of property which is thereafter included in his gross estate, and, under the provisions of section 2513 of the Internal Revenue Code of 1954 or section 1000(f) of the Internal Revenue Code of 1939, the gift was considered as made one-half by the decedent and one-half by his spouse, credit against the estate tax is allowed for the gift tax paid with respect to both halves of the gift. The “first limitation” is to be separately computed with respect to each half of the gift in accordance with the principles stated in paragraph (c) of this section. The “second limitation” is to be computed with respect to the entire gift in accordance with the principles stated in paragraph (d) of this section. To illustrate: A donor, in contemplation of death, transferred property valued at $106,000 to his son on January 1, 1955, and he and his wife consented that the gift should be considered as made one-half by him and one-half by her. The property was thereafter included in the donor's gross estate. Under the “first limitation”, the amount of the gift tax of the donor paid with respect to the one-half of the gift considered as made by him is determined to be $11,250, and the amount of the gift tax of his wife paid with respect to the one-half of the gift considered as made by her is determined to be $1,200. Under the “second limitation”, the amount of the estate tax attributable to the property is determined to be $28,914. Therefore, the credit for gift tax allowed is $12,450 ($11,250 plus $1,200).

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 7238, 37 FR 28718, Dec. 29, 1972; T.D. 8522, 59 FR 9646, Mar. 1, 1994]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 7238, 37 FR 28718, Dec. 29, 1972; T.D. 8522, 59 FR 9646, Mar. 1, 1994]

§20.2013-1. Credit for tax on prior transfers.

26 C.F.R. § 20.2013-1

(a)

In general. A credit is allowed under section 2013 against the Federal estate tax imposed on the present decedent's estate for Federal estate tax paid on the transfer of property to the present decedent from a transferor who died within ten years before, or within two years after, the present decedent's death. See § 20.2013-5 for definition of the terms “property” and “transfer”. There is no requirement that the transferred property be identified in the estate of the present decedent or that the property be in existence at the time of the decedent's death. It is sufficient that the transfer of the property was subjected to Federal estate tax in the estate of the transferor and that the transferor died within the prescribed period of time. The executor must submit such proof as may be requested by the district director in order to establish the right of the estate to the credit.

(b)

Limitations on credit. The credit for tax on prior transfers is limited to the smaller of the following amounts:

(1)

The amount of the Federal estate tax attributable to the transferred property in the transferor's estate, computed as set forth in § 20.2013-2; or

(2)

The amount of the Federal estate tax attributable to the transferred property in the decedent's estate, computed as set forth in § 20.2013-3.

(c)

Percentage reduction. If the transferor died within the two years before, or within the two years after, the present decedent's death, the credit is the smaller of the two limitations described in paragraph (b) of this section. If the transferor predeceased the present decedent by more than two years, the credit is a certain percentage of the smaller of the two limitations described in paragraph (b) of this section, determined as follows:

(1)

80 percent, if the transferor died within the third or fourth years preceding the present decedent's death;

(2)

40 percent, if the transferor died within the fifth or sixth years preceding the present decedent's death;

(3)

40 percent, if the transferor died within the seventh or eighth years preceding the present decedent's death; and

(4)

20 percent, if the transferor died within the ninth or tenth years preceding the present decedent's death.

(d)

Examples. For illustrations of the application of this section, see examples (1) and (2) set forth in § 20.2013-6.

Notes, amendments, and revision history

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

§20.2013-2. “First limitation”.

26 C.F.R. § 20.2013-2

(a)

The amount of the Federal estate tax attributable to the transferred property in the transferor's estate is the “first limitation.” Thus, the credit is limited to an amount, A, which bears the same ratio to B (the “transferor's adjusted Federal estate tax”, computed as described in paragraph (b) of this section) as C (the value of the property transferred (see § 20.2013-4)) bears to D (the “transferor's adjusted taxable estate”, computed as described in paragraph (c) of this section). Stated algebraically, the “first limitation” (A) equals:

(b)

For purposes of the ratio stated in paragraph (a) of this section, the “transferor's adjusted Federal estate tax” referred to as factor “B” is the amount of the Federal estate tax paid with respect to the transferor's estate plus:

(1)

Any credit allowed the transferor's estate for gift tax under section 2012, or the corresponding provisions of prior law; and

(2)

Any credit allowed the transferor's estate, under section 2013, for tax on prior transfers, but only if the transferor acquired property from a person who died within 10 years before the death of the present decedent.

(c)

(1)

For purposes of the ratio stated in paragraph (a) of this section, the “transferor's adjusted taxable estate” referred to as factor “D” is the amount of the transferor's taxable estate (or net estate) decreased by the amount of any “death taxes” paid with respect to his gross estate and increased by the amount of the exemption allowed in computing his taxable estate (or net estate). The amount of the transferor's taxable estate (or net estate) is determined in accordance with the provisions of § 20.2051-1 in the case of a citizen or resident of the United States or of § 20.2106-1 in the case of a nonresident not a citizen of the United States (or the corresponding provisions of prior regulations). The term “death taxes” means the Federal estate tax plus all other estate, inheritance, legacy, succession, or similar death taxes imposed by, and paid to, any taxing authority, whether within or without the United States. However, only the net amount of such taxes paid is taken into consideration.

(2)

The amount of the exemption depends upon the citizenship and residence of the transferor at the time of his death. Except in the case of a decedent described in section 2209 (relating to certain residents of possessions of the United States who are considered nonresidents not citizens), if the decedent was a citizen or resident of the United States, the exemption is the $60,000 authorized by section 2052 (or the corresponding provisions of prior law). If the decedent was a nonresident not a citizen of the United States, or is considered under section 2209 to have been such a nonresident, the exemption is the $30,000 or $2,000, as the case may be, authorized by section 2106(a)(3) (or the corresponding provisions of prior law), or such larger amount as is authorized by section 2106(a)(3)(B) or may have been allowed as an exemption pursuant to the prorated exemption provisions of an applicable death tax convention. See § 20.2052-1 and paragraph (a)(3) of § 20.2106-1.

(d)

If the credit for tax on prior transfers relates to property received from two or more transferors, the provisions of this section are to be applied separately with respect to the property received from each transferor. See paragraph (b) of example (2) in § 20.2013-6.

(e)

For illustrations of the application of this section, see examples (1) and (2) set forth in § 20.2013-6.

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, as amended by T.D. 7296, 38 FR 34191, Dec. 12, 1973]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, as amended by T.D. 7296, 38 FR 34191, Dec. 12, 1973]

§20.2013-3. “Second limitation”.

26 C.F.R. § 20.2013-3

(a)

The amount of the Federal estate tax attributable to the transferred property in the present decedent's estate is the “second limitation”. Thus, the credit is limited to the difference between—

(1)

The net estate tax payable (see paragraph (b)(5) or (c), as the case may be, of § 20.0-2) with respect to the present decedent's estate, determined without regard to any credit for tax on prior transfers under section 2013 or any credit for foreign death taxes claimed under the provisions of a death tax convention, and

(2)

The net estate tax determined as provided in subparagraph (1) of this paragraph but computed by subtracting from the present decedent's gross estate the value of the property transferred (see § 20.2013-4), and by making only the adjustment indicated in paragraph (b) of this section if a charitable deduction is allowable to the estate of the present decedent.

(b)

If a charitable deduction is allowable to the estate of the present decedent under the provisions of section 2055 or section 2106 (a)(2) (for estates of nonresidents not citizens), for purposes of determining the tax described in paragraph (a)(2) of this section, the charitable deduction otherwise allowable is reduced by an amount, E, which bears the same ratio to F (the charitable deduction otherwise allowable) as G (the value of the transferred property (see § 20.2013-4)) bears to H (the value of the present decedent's gross estate reduced by the amount of the deductions for expenses, indebtedness, taxes, losses, etc., allowed under the provisions of sections 2053 and 2054 or section 2106(a)(1) (for estates of nonresidents not citizens)). See paragraph (c)(2) of example (1) and paragraph (c)(2) of example (2) in § 20.2013-6.

(c)

If the credit for tax on prior transfers relates to property received from two or more transferors, the property received from all transferors is aggregated in determining the limitation on credit under this section (the “second limitation”). However, the limitation so determined is apportioned to the property received from each transferor in the ratio that the property received from each transferor bears to the total property received from all transferors. See paragraph (c) of example (2) in § 20.2013-6.

(d)

For illustrations of the application of this section, see examples (1) and (2) set forth in § 20.2013-6.

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, as amended by T.D. 7296, 38 FR 34191, Dec. 12, 1973]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, as amended by T.D. 7296, 38 FR 34191, Dec. 12, 1973]

§20.2013-4. Valuation of property transferred.

26 C.F.R. § 20.2013-4

(a)

For purposes of section 2013 and §§ 20.2013-1 to 20.2013-6, the value of the property transferred to the decedent is the value at which the property was included in the transferor's gross estate for the purpose of the Federal estate tax (see sections 2031, 2032, 2103, and 2107, and the regulations thereunder) reduced as indicated in paragraph (b) of this section. If the decedent received a life estate or a remainder or other limited interest in property that was included in a transferor decedent's gross estate, the value of the interest is determined as of the date of the transferor's death on the basis of recognized valuation principles (see §§ 20.2031-7 (or, for certain prior periods, § 20.2031-7A) and 20.7520-1 through 20.7520-4). The application of this paragraph may be illustrated by the following examples:

(b)

In arriving at the value of the property transferred to the decedent, the value at which the property was included in the transferor's gross estate (see paragraph (a) of this section) is reduced as follows:

(1)

By the amount of the Federal estate tax and any other estate, inheritance, legacy, or succession taxes which were payable out of the property transferred to the decedent or which were payable by the decedent in connection with the property transferred to him. For example, if under the transferor's will or local law all death taxes are to be paid out of other property with the result that the decedent receives a bequest free and clear of all death taxes, no reduction is to be made under this subparagraph;

(2)

By the amount of any marital deduction allowed the transferor's estate under section 2056 (or under section 812(e) of the Internal Revenue Code of 1939) if the decedent was the spouse of the transferor at the time of the transferor's death;

(3)

(i)

By the amount of administration expenses in accordance with the principles of § 20.2056(b)-4(d).

(ii)

This paragraph (b)(3) applies to transfers from estates of decedents dying on or after December 3, 1999; and

(4)

(i)

By the amount of any encumbrance on the property or by the amount of any obligation imposed by the transferor and incurred by the decedent with respect to the property, to the extent such charges would be taken into account if the amount of a gift to the decedent of such property were being determined.

(ii)

For purposes of this subparagraph, an obligation imposed by the transferor and incurred by the decedent with respect to the property includes a bequest, etc., in lieu of the interest of the surviving spouse under community property laws, unless the interest was, immediately prior to the transferor's death, a mere expectancy. However, an obligation imposed by the transferor and incurred by the decedent with respect to the property does not include a bequest, devise, or other transfer in lieu of dower, curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the transferor's property or estate.

(iii)

The application of this subparagraph may be illustrated by the following examples:

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 7077, 35 FR 18461, Dec. 4, 1970; T.D. 7296, 38 FR 34191, Dec. 12, 1973; T.D. 8522, 59 FR 9646, Mar. 1, 1994; T.D. 8540, 59 FR 30151, June 10, 1994; T.D. 8846, 64 FR 67764, Dec. 3, 1999]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 7077, 35 FR 18461, Dec. 4, 1970; T.D. 7296, 38 FR 34191, Dec. 12, 1973; T.D. 8522, 59 FR 9646, Mar. 1, 1994; T.D. 8540, 59 FR 30151, June 10, 1994; T.D. 8846, 64 FR 67764, Dec. 3, 1999]

§20.2013-5. “Property” and “transfer” defined.

26 C.F.R. § 20.2013-5

(a)

For purposes of section 2013 and §§ 20.2013-1 to 20.2013-6, the term “property” means any beneficial interest in property, including a general power of appointment (as defined in section 2041) over property. Thus, the term does not include an interest in property consisting merely of a bare legal title, such as that of a trustee. Nor does the term include a power of appointment over property which is not a general power of appointment (as defined in section 2041). Examples of property, as described in this paragraph, are annuities, life estates, estates for terms of years, vested or contingent remainders and other future interests.

(b)

In order to obtain the credit for tax on prior transfers, there must be a transfer of property described in paragraph (a) of this section by or from the transferor to the decedent. The term “transfer” of property by or from a transferor means any passing of property or an interest in property under circumstances which were such that the property or interest was included in the gross estate of the transferor. In this connection, if the decedent receives property as a result of the exercise or nonexercise of a power of appointment, the donee of the power (and not the creator) is deemed to be the transferor of the property if the property subject to the power is includible in the donee's gross estate under section 2041 (relating to powers of appointment). Thus, notwithstanding the designation by local law of the capacity in which the decedent takes, property received from the transferor includes interests in property held by or devolving upon the decedent: (1) As spouse under dower or curtesy laws or laws creating an estate in lieu of dower or curtesy; (2) as surviving tenant of a tenancy by the entirety or joint tenancy with survivorship rights; (3) as beneficiary of the proceeds of life insurance; (4) as survivor under an annuity contract; (5) as donee (possessor) of a general power of appointment (as defined in section 2041); (6) as appointee under the exercise of a general power of appointment (as defined in section 2041); or (7) as remainderman under the release or nonexercise of a power of appointment by reason of which the property is included in the gross estate of the donee of the power under section 2041.

(c)

The application of this section may be illustrated by the following example:

Notes, amendments, and revision history

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

§20.2013-6. Examples.

26 C.F.R. § 20.2013-6

The application of §§ 20.2013-1 to 20.2013-5 may be further illustrated by the following examples:

Notes, amendments, and revision history

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

§20.2014-1. Credit for foreign death taxes.

26 C.F.R. § 20.2014-1

(a)

In general.

(1)

A credit is allowed under section 2014 against the Federal estate tax for any estate, inheritance, legacy, or succession taxes actually paid to any foreign country (hereinafter referred to as “foreign death taxes”). The credit is allowed only for foreign death taxes paid (i) with respect to property situated within the country to which the tax is paid, (ii) with respect to property included in the decedent's gross estate, and (iii) with respect to the decedent's estate. The credit is allowable to the estate of a decedent who was a citizen of the United States at the time of his death. The credit is also allowable, as provided in paragraph (c) of this section, to the estate of a decedent who was a resident but not a citizen of the United States at the time of his death. The credit is not allowable to the estate of a decedent who was neither a citizen nor a resident of the United States at the time of his death. See paragraph (b)(1) of § 20.0-1 for the meaning of the term “resident” as applied to a decedent. The credit is allowable not only for death taxes paid to foreign countries which are states in the international sense, but also for death taxes paid to possessions or political subdivisions of foreign states. With respect to the estate of a decedent dying after September 2, 1958, the term “foreign country”, as used in this section and §§ 20.2014-2 to 20.2014-6, includes a possession of the United States. See §§ 20.2011-1 and 20.2011-2 for the allowance of a credit for death taxes paid to a possession of the United States in the case of a decedent dying before September 3, 1958. No credit is allowable for interest or penalties paid in connection with foreign death taxes.

(2)

In addition to the credit for foreign death taxes under section 2014, similar credits are allowed under death tax conventions with certain foreign countries. If credits against the Federal estate tax are allowable under section 2014, or under section 2014 and one or more death tax conventions, for death taxes paid to more than one country, the credits are combined and the aggregate amount is credited against the Federal estate tax, subject to the limitation provided for in paragraph (c) of § 20.2014-4. For application of the credit in cases involving a death tax convention, see § 20.2014-4.

(3)

No credit is allowable under section 2014 in connection with property situated outside of the foreign country imposing the tax for which credit is claimed. However, such a credit may be allowable under certain death tax conventions. In the case of a tax imposed by a political subdivision of a foreign country, credit for the tax shall be allowed with respect to property having a situs in that foreign country, even though, under the principles described in this subparagraph, the property has a situs in a political subdivision different from the one imposing the tax. Whether or not particular property of a decedent is situated in the foreign country imposing the tax is determined in accordance with the same principles that would be applied in determining whether or not similar property of a nonresident decedent not a citizen of the United States is situated within the United States for Federal estate tax purposes. See §§ 20.2104-1 and 20.2105-1. For example, under § 20.2104-1 shares of stock are deemed to be situated in the United States only if issued by a domestic corporation. Thus, a share of corporate stock is regarded as situated in the foreign country imposing the tax only if the issuing corporation is incorporated in that country. Further, under § 20.2105-1 amounts receivable as insurance on the life of a nonresident not a citizen of the United States at the time of his death are not deemed situated in the United States. Therefore, in determining the credit under section 2014 in the case of a decedent who was a citizen or resident of the United States, amounts receivable as insurance on the life of the decedent and payable under a policy issued by a corporation incorporated in a foreign country are not deemed situated in such foreign country. In addition, under § 20.2105-1 in the case of an estate of a nonresident not a citizen of the United States who died on or after November 14, 1966, a debt obligation of a domestic corporation is not considered to be situated in the United States if any interest thereon would be treated under section 862(a)(1) as income from sources without the United States by reason of section 861(a)(1)(B) (relating to interest received from a domestic corporation less than 20 percent of whose gross income for a 3-year period was derived from sources within the United States). Accordingly, a debt obligation the primary obligor on which is a corporation incorporated in the foreign country imposing the tax is not considered to be situated in that country if, under circumstances corresponding to those described in § 20.2105-1 less than 20 percent of the gross income of the corporation for the 3-year period was derived from sources within that country. Further, under § 20.2104-1 in the case of an estate of a nonresident not a citizen of the United States who died before November 14, 1966, a bond for the payment of money is not situated within the United States unless it is physically located in the United States. Accordingly, in the case of the estate of a decedent dying before November 14, 1966, a bond is deemed situated in the foreign country imposing the tax only if it is physically located in that country. Finally, under § 20.2105-1 moneys deposited in the United States with any person carrying on the banking business by or for a nonresident not a citizen of the United States who died before November 14, 1966, and who was not engaged in business in the United States at the time of death are not deemed situated in the United States. Therefore, an account with a foreign bank in the foreign country imposing the tax is not considered to be situated in that country under corresponding circumstances.

(4)

Where a deduction is allowed under section 2053(d) for foreign death taxes paid with respect to a charitable gift, the credit for foreign death taxes is subject to further limitations as explained in § 20.2014-7.

(b)

Limitations on credit. The credit for foreign death taxes is limited to the smaller of the following amounts:

(1)

The amount of a particular foreign death tax attributable to property situated in the country imposing the tax and included in the decedent's gross estate for Federal estate tax purposes, computed as set forth in § 20.2014-2; or

(2)

The amount of the Federal estate tax attributable to particular property situated in a foreign country, subjected to foreign death tax in that country, and included in the decedent's gross estate for Federal estate tax purposes, computed as set forth in § 20.2014-3.

(c)

Credit allowable to estate of resident not a citizen.

(1)

In the case of an estate of a decedent dying before November 14, 1966, who was a resident but not a citizen of the United States, a credit is allowed to the estate under section 2014 only if the foreign country of which the decedent was a citizen or subject, in imposing foreign death taxes, allows a similar credit to the estates of citizens of the United States who were resident in that foreign country at the time of death.

(2)

In the case of an estate of a decedent dying on or after November 14, 1966, who was a resident but not a citizen of the United States, a credit is allowed to the estate under section 2014 without regard to the similar credit requirement of subparagraph (1) of this paragraph unless the decedent was a citizen or subject of a foreign country with respect to which there is in effect at the time of the decedent's death a Presidential proclamation, as authorized by section 2014(h), reinstating the similar credit requirement. In the case of an estate of a decedent who was a resident of the United States and a citizen or subject of a foreign country with respect to which such a proclamation has been made, and who dies while the proclamation is in effect, a credit is allowed under section 2014 only if that foreign country, in imposing foreign death taxes, allows a similar credit to the estates of citizens of the United States who were resident in that foreign country at the time of death. The proclamation authorized by section 2014(h) for the reinstatement of the similar credit requirement with respect to the estates of citizens or subjects of a specific foreign country may be made by the President whenever he finds that—

(i)

The foreign country, in imposing foreign death taxes, does not allow a similar credit to the estates of citizens of the United States who were resident in the foreign country at the time of death,

(ii)

The foreign country, after having been requested to do so, has not acted to provide a similar credit to the estates of such citizens, and

(iii)

It is in the public interest to allow the credit under section 2014 to the estates of citizens or subjects of the foreign country only if the foreign country allows a similar credit to the estates of citizens of the United States who were resident in the foreign country at the time of death.

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6526, 26 FR 415, Jan. 19, 1961; T.D. 6600, 27 FR 4983, May 29, 1962; T.D. 7296, 38 FR 34192, Dec. 12, 1973]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6526, 26 FR 415, Jan. 19, 1961; T.D. 6600, 27 FR 4983, May 29, 1962; T.D. 7296, 38 FR 34192, Dec. 12, 1973]

§20.2014-2. “First limitation”.

26 C.F.R. § 20.2014-2

(a)

The amount of a particular foreign death tax attributable to property situated in the country imposing the tax and included in the decedent's gross estate for Federal estate tax purposes is the “first limitation.” Thus, the credit for any foreign death tax is limited to an amount, A, which bears the same ratio to B (the amount of the foreign death tax without allowance of credit, if any, for Federal estate tax), as C (the value of the property situated in the country imposing the foreign death tax, subjected to the foreign death tax, included in the gross estate and for which a deduction is not allowed under section 2053(d)) bears to D (the value of all property subjected to the foreign death tax). Stated algebraically, the “first limitation” (A) equals—

(b)

If a foreign country imposes more than one kind of death tax or imposes taxes at different rates upon the several shares of an estate, or if a foreign country and a political subdivision or possession thereof each imposes a death tax, a “first limitation” is to be computed separately for each tax or rate and the results added in order to determine the total “first limitation.” The application of this paragraph may be illustrated by the following example:

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6600, 27 FR 4984, May 29, 1962; T.D. 6684, 28 FR 11408, Oct. 24, 1963; T.D. 7296, 38 FR 34193, Dec. 12, 1973; 39 FR 2090, Jan. 17, 1974]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6600, 27 FR 4984, May 29, 1962; T.D. 6684, 28 FR 11408, Oct. 24, 1963; T.D. 7296, 38 FR 34193, Dec. 12, 1973; 39 FR 2090, Jan. 17, 1974]

§20.2014-3. “Second limitation”.

26 C.F.R. § 20.2014-3

(a)

The amount of the Federal estate tax attributable to particular property situated in a foreign country, subjected to foreign death tax in that country, and included in the decedent's gross estate for Federal estate tax purposes is the “second limitation.” Thus, the credit is limited to an amount, E, which bears the same ratio to F (the gross Federal estate tax, reduced by any credit for State death taxes under section 2011 and by any credit for gift tax under section 2012) as G (the “adjusted value of the property situated in the foreign country, subjected to foreign death tax, and included in the gross estate”, computed as described in paragraph (b) of this section) bears to H (the value of the entire gross estate, reduced by the total amount of the deductions allowed under sections 2055 (charitable deduction) and 2056 (marital deduction)). Stated algebraically, the “second limitation” (E) equals:

(b)

Adjustment is required to factor “G” of the ratio stated in paragraph (a) of this section if a deduction for foreign death taxes under section 2053(d), a charitable deduction under section 2055, or a marital deduction under section 2056 is allowed with respect to the foreign property. If a deduction for foreign death taxes is allowed, the value of the property situated in the foreign country, subjected to foreign death tax, and included in the gross estate does not include the value of any property in respect of which the deduction for foreign death taxes is allowed. See § 20.2014-7. If a charitable deduction or a marital deduction is allowed, the value of such foreign property (after exclusion of the value of any property in respect of which the deduction for foreign death taxes is allowed) is reduced as follows:

(1)

If a charitable deduction or a marital deduction is allowed to a decedent's estate with respect to any part of the foreign property, except foreign property in respect of which a deduction for foreign death taxes is allowed, specifically bequeathed, devised, or otherwise specifically passing to a charitable organization or to the decedent's spouse, the value of the foreign property is reduced by the amount of the charitable deduction or marital deduction allowed with respect to such specific transfer. See example (1) of paragraph (c) of this section.

(2)

If a charitable deduction or a marital deduction is allowed to a decedent's estate with respect to a bequest, devise or other transfer of an interest in a group of assets including both the foreign property and other property, the value of the foreign property is reduced by an amount, I, which bears the same ratio to J (the amount of the charitable deduction or marital deduction allowed with respect to such transfer of an interest in a group of assets) as K (the value of the foreign property, except foreign property in respect of which a deduction for foreign death taxes is allowed, included in the group of assets) bears to L (the value of the entire group of assets). As used in this subparagraph, the term “group of assets” has reference to those assets which, under applicable law, are chargeable with the charitable or marital transfer. See example (2) of paragraph (c) of this section.

(c)

The application of paragraphs (a) and (b) of this section may be illustrated by the following examples. In each case, the computations relate to the amount of credit under section 2014 without regard to the amount of credit which may be allowable under an applicable death tax convention.

(d)

If the foreign country imposes more than one kind of death tax or imposes taxes at different rates upon the several shares of an estate, or if the foreign country and a political subdivision or possession thereof each imposes a death tax, the “second limitation” is still computed by applying the ratio set forth in paragraph (a) of this section. Factor “G” of the ratio is determined by taking into consideration the combined value of the foreign property which is subjected to each different tax or different rate. The combined value, however, cannot exceed the value at which such property was included in the gross estate for Federal estate tax purposes. Thus, if Country X imposes a tax on the inheritance of a surviving spouse at a 10-percent rate and on the inheritance of a son at a 20-percent rate, the combined value of their inheritances is taken into consideration in determining factor “G” of the ratio, which is then used in computing the “second limitation.” However, the “first limitation” is computed as provided in paragraph (b) of § 20.2014-2. The lesser of the “first limitation” and the “second limitation” is the credit for foreign death taxes.

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6600, 27 FR 4984, May 29, 1962; T.D. 7296, 38 FR 34193, Dec. 12, 1973; T.D. 8522, 59 FR 9646, Mar. 1, 1994]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6600, 27 FR 4984, May 29, 1962; T.D. 7296, 38 FR 34193, Dec. 12, 1973; T.D. 8522, 59 FR 9646, Mar. 1, 1994]

§20.2014-4. Application of credit in cases involving a death tax convention.

26 C.F.R. § 20.2014-4

(a)

In general.

(1)

If credit for a particular foreign death tax is authorized by a death tax convention, there is allowed either the credit provided for by the convention or the credit provided for by section 2014, whichever is the more beneficial to the estate. For cases where credit may be taken under both the death tax convention and section 2014, see paragraph (b) of this section. The application of this paragraph may be illustrated by the following example:

(2)

It should be noted that the greater of the treaty credit and the statutory credit is not necessarily the more beneficial to the estate. Such is the situation, for example, in those cases which involve both a foreign death tax credit and a credit under section 2013 for tax on prior transfers. The reason is that the amount of the credit for tax on prior transfers may differ depending upon whether the credit for foreign death tax is taken under the treaty or under the statute. Therefore, under certain circumstances, the advantage of taking the greater of the treaty credit and the statutory credit may be more than offset by a resultant smaller credit for tax on prior transfers. The solution is to compute the net estate tax payable first on the assumption that the treaty credit will be taken and then on the assumption that the statutory credit will be taken. Such computations will indicate whether the treaty credit or the statutory credit is in fact the more beneficial to the estate.

(b)

Taxes imposed by both a foreign country and a political subdivision thereof. If death taxes are imposed by both a foreign country with which the United States has entered into a death tax convention and one or more of its possessions or political subdivisions, there is allowed, against the tax imposed by section 2001—

(1)

A credit for the combined death taxes paid to the foreign country and its political subdivisions or possessions as provided for by the convention, or

(2)

A credit for the combined death taxes paid to the foreign country and its political subdivisions or possessions as determined under section 2014, or

(3)

(i)

A credit for that amount of the combined death taxes paid to the foreign country and its political subdivisions or possessions as is allowable under the convention, and

(ii)

A credit under section 2014 for the death taxes paid to each political subdivision or possession, but only to the extent such death taxes are not directly or indirectly creditable under the convention.

(c)

Taxes imposed by two foreign countries with respect to the same property. It is stated as a general rule in paragraph (a)(2) of § 20.2014-1 that if credits against the Federal estate tax are allowable under section 2014, or under section 2014 and one or more death tax conventions, for death taxes paid to more than one country, the credits are combined and the aggregate amount is credited against the Federal estate tax. This rule may result in credit being allowed for taxes imposed by two different countries upon the same item of property. If such is the case, the total amount of the credits with respect to such property is limited to the amount of the Federal estate tax attributable to the property, determined in accordance with the rules prescribed for computing the “second limitation” set forth in § 20.2014-3. The application of this section may be illustrated by the following example:

Notes, amendments, and revision history

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6742, 29 FR 7928, June 23, 1964; T.D. 7296, 38 FR 34193, Dec. 12, 1973]

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

Amendments

[T.D. 6296, 23 FR 4529, June 24, 1958, as amended by T.D. 6742, 29 FR 7928, June 23, 1964; T.D. 7296, 38 FR 34193, Dec. 12, 1973]

§20.2014-5. Proof of credit.

26 C.F.R. § 20.2014-5

(a)

If the foreign death tax has not been determined and paid by the time the Federal estate tax return required by section 6018 is filed, credit may be claimed on the return in an estimated amount. However, before credit for the foreign death tax is finally allowed, satisfactory evidence, such as a statement by an authorized official of each country, possession or political subdivision thereof imposing the tax, must be submitted on Form 706CE certifying:

(1)

The full amount of the tax (exclusive of any interest or penalties), as computed before allowance of any credit, remission, or relief;

(2)

The amount of any credit, allowance, remission, or relief, and other pertinent information, including the nature of the allowance and a description of the property to which it pertains;

(3)

The net foreign death tax payable after any such allowance;

(4)

The date on which the death tax was paid, or if not all paid at one time, the date and amount of each partial payment; and

(5)

A list of the property situated in the foreign country and subjected to its tax, showing a description and the value of the property.

(b)

The following information must also be submitted whenever applicable:

(1)

If any of the property subjected to the foreign death tax was situated outside of the country imposing the tax, the description of each item of such property and its value.

(2)

If more than one inheritance or succession is involved with respect to which credit is claimed, or if the foreign country, possession or political subdivision thereof imposes more than one kind of death tax, or if both the foreign country and a possession or political subdivision thereof each imposes a death tax, a separate computation with respect to each inheritance or succession tax.

(c)

In addition to the information required under paragraphs (a) and (b) of this section, the district director may require the submission of any further proof deemed necessary to establish the right to the credit.

Notes, amendments, and revision history

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.

§20.2014-6. Period of limitations on credit.

26 C.F.R. § 20.2014-6

The credit for foreign death taxes under section 2014 is limited to those taxes which were actually paid and for which a credit was claimed within four years after the filing of the estate tax return for the decedent's estate. If, however, a petition has been filed with the Tax Court of the United States for the redetermination of a deficiency within the time prescribed in section 6213(a), the credit is limited to those taxes which were actually paid and for which a credit was claimed within four years after the filing of the return, or before the expiration of 60 days after the decision of the Tax Court becomes final, whichever period is the last to expire. Similarly, if an extension of time has been granted under section 6161 for payment of the tax shown on the return, or of a deficiency, the credit is limited to those taxes which were actually paid and for which a credit was claimed within four years after the filing of the return, or before the date of the expiration of the period of the extension, whichever period is the last to expire. See section 2015 for the applicable period of limitations for credit for foreign death taxes on reversionary or remainder interests if an election is made under section 6163(a) to postpone payment of the estate tax attributable to reversionary or remainder interests. If a claim for refund based on the credit for foreign death taxes is filed within the applicable period described in this section, a refund may be made despite the general limitation provisions of sections 6511 and 6512. Any refund based on the credit for foreign death taxes shall be made without interest.

Notes, amendments, and revision history

Authority

Authority: 26 U.S.C. 7805. Section 20.2010-0 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-1 also issued under 26 U.S.C. 2001(g)(2) and 26 U.S.C. 2010(c)(6). Section 20.2010-2 also issued under 26 U.S.C. 2010(c)(6). Section 20.2010-3 also issued under 26 U.S.C. 2010(c)(6). Section 20.2031-7 also issued under 26 U.S.C. 7520(c)(2). Section 20.2031-7A also issued under 26 U.S.C. 7520(c)(2). Section 20.6060-1 also issued under 26 U.S.C. 6060(a). Section 20.6081-1 also issued under 26 U.S.C. 6081(a). Section 20.6109-1 also issued under 26 U.S.C. 6109(a). Section 20.6109-2 also issued under 26 U.S.C. 6109(a). Section 20.6302-1 also issued under 26 U.S.C. 6302(a) and (h). Section 20.6695-1 also issued under 26 U.S.C. 6695(b). Section 20.7520-1 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-2 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-3 also issued under 26 U.S.C. 7520(c)(2). Section 20.7520-4 also issued under 26 U.S.C. 7520(c)(2).

Source

Source: T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, unless otherwise noted.