Example (1).
(a) A died December 1, 1953, leaving a gross estate of $1,000,000. Expenses, indebtedness, etc., amounted to $90,000. A bequeathed $200,000 to B, his wife, $100,000 of which qualified for the marital deduction. B died November 1, 1954, leaving a gross estate of $500,000. Expenses, indebtedness, etc., amounted to $40,000. B bequeathed $150,000 to charity. A and B were both citizens of the United States. The estates of A and B both paid State death taxes equal to the maximum credit allowable for State death taxes. Death taxes were not a charge on the bequest to B.
(b) “First limitation” on credit for B's estate (§ 20.2013-2):
A's gross estate |
$1,000,000.00
|
Expenses, indebtedness, etc. |
90,000.00
|
A's adjusted gross estate |
910,000.00
|
Marital deduction |
$100,000.00
|
|
Exemption |
60,000.00
|
|
|
|
160,000.00
|
A's taxable estate |
750,000.00
|
A's gross estate tax |
233,200.00
|
Credit for State death taxes |
23,280.00
|
A's net estate tax payable |
209,920.00
|
“First limitation” = $209,920.00 (§ 20.2013-2(b)) × [($200,000.00 − $100,000.00) (§ 20.2013-4) ÷ ($750,000.00 − $209,920.00 − $23,280.00 + $60,000.00) (§ 20.2013-2(c))] |
|
$36,393.90 |
(c) “Second limitation” on credit for B's estate (
§ 20.2013-3):
(1) B's net estate tax payable as described in § 20.2013-3(a)(1) (previously taxed transfer included):
B's gross estate |
$500,000.00
|
|
Expenses, indebtedness, etc. |
$40,000.00
|
|
Charitable deduction |
150,000.00
|
|
Exemption |
60,000.00
|
|
|
|
250,000.00
|
B's taxable estate |
|
250,000.00
|
B's gross estate tax |
$65,700.00
|
Credit for State death taxes |
3,920.00
|
B's net estate tax payable |
61,780.00 |
(2) B's net estate tax payable as described in
§ 20.2013-3(a)(2) (previously taxed transfer excluded):
B's gross estate |
|
$400,000.00
|
Expenses, indebtedness, etc |
$40,000.00
|
|
Charitable deduction (§ 20.2013-3(b)) = $150,000.00 − [$150,000.00 × ($200,000.00 − $100,000.00 ÷ $500,000.00 − $40,000.00)] |
117,391.30
|
|
Exemption |
60,000.00
|
|
|
|
217,391.30
|
B's taxable estate |
182,608.70
|
B's gross estate tax |
45,482.61
|
Credit for State death taxes |
2,221.61
|
B's net estate tax payable |
43,260.00 |
(3) “Second limitation”:
Subparagraph (1) |
$61,780.00
|
|
Less: Subparagraph (2) |
43,260.00
|
|
|
|
$18,520.00 |
Credit for tax on prior transfers = $18,520.00 (lower of paragraphs (b) and (c)) × 100 percent (percentage to be taken into account under § 20.2013-1(c)) |
$18,520.00 |
Example (2).
(a) The facts are the same as those contained in example (1) of this paragraph with the following additions. C died December 1, 1950, leaving a gross estate of $250,000. Expenses, indebtedness, etc., amounted to $50,000. C bequeathed $50,000 to B. C was a citizen of the United States. His estate paid State death taxes equal to the maximum credit allowable for State death taxes. Death taxes were not a charge on the bequest to B.
(b) “First limitation” on credit for B's estate (§ 20.2013-2(d))−
(1) With respect to the property received from A:
“First limitation” = $36,393.90 (this computation is identical with the one contained in paragraph (b) of example (1) of this section).
(2) With respect to the property received from C:
C's gross estate |
|
$250,000.00
|
Expenses, indebtedness, etc. |
$50,000.00
|
|
Exemption |
$60,000.00
|
|
|
|
$110,000.00
|
C's taxable estate |
|
140,000.00
|
C's gross estate tax |
|
32,700.00
|
Credit for State death taxes |
|
1,200.00
|
C's net estate tax payable |
|
31,500.00
|
“First limitation” = $31,500.00 (§ 20.2013-2(b)) × [$50,000.00 (§ 20.2013-4) ÷ ($140,000.00 − $31,500.00 − $1,200.00 + $60,000.00) (§ 20.2013-2(c))] |
$9,414.23 |
(1) B's net estate tax payable as described in § 20.2013-3(a)(1) (previously taxed transfers included) = $61,780.00 (this computation is identical with the one contained in paragraph (c)(1) of example (1) of this section).
(2) B's net estate tax payable as described in § 20.2013-3(a)(2) (previously taxed transfers excluded):
B's gross estate |
$350,000.00
|
Expenses, indebtedness, etc |
$40,000.00
|
|
Charitable deduction (§ 20.2013-3(b)) = $150,000.00 − [$150,000.00 × ($200,000.00 − $100,000.00 + $50,000.00) ÷ ($500,000.00 − $40,000.00)] |
101,086.96
|
|
Exemption |
60,000.00
|
|
|
201,086.96
|
B's taxable estate |
|
148,913.04
|
B's gross estate tax |
|
35,373.91
|
Credit for State death taxes |
|
1,413.91
|
B's net estate tax payable |
|
33,960.00 |
(3) “Second limitation”:
Subparagraph (1) |
$61,780.00
|
|
Less: Subparagraph (2) |
33,960.00
|
|
|
|
$27,820.00 |
(4) Apportionment of “second limitation” on credit:
Transfer from A (§ 20.2013-4) |
$100,000.00
|
Transfer from C (§ 20.2013-4) |
50,000.00
|
Total |
150,000.00
|
Portion of “second limitation” attributable to transfer from A (100/150 of $27,820.00) |
18,546.67
|
Portion of “second limitation” attributable to transfer from C (50/150 of $27,820.00) |
9,273.33 |
Credit for tax on transfer from A=
|
|
$18,546.67 (lower of “first limitation” computed in paragraph (b)(1) and “second limitation” apportioned to A's transfer in paragraph (c)(4)) × 100 percent (percentage to be taken into account under § 20.2013-1(c)) |
$18,546.67
|
Credit for tax on transfer from C=
|
|
$9,273.33 (lower of “first limitation” computed in paragraph (b)(2) and “second limitation” apportioned to B's transfer in paragraph (c)(4)) × 80 percent (percentage to be taken into account under § 20.2013-1(c)) |
7,418.66
|
Total credit for tax on prior transfers |
25,965.33 |