Title 26: Internal Revenue
PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954
Credits Against Tax
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§ 20.2013-6 Examples.
The application of §§20.2013–1 to 20.2013–5 may be further illustrated by the following examples:
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....................................... $1,000,000.00Expenses, indebtedness, etc........... 90,000.00 ------------------ A's adjusted gross estate.......... 910,000.00Marital deduction..................... $100,000.00Exemption............................. 60,000.00 ----------------- ............... 160,000.00 ------------------ A's taxable estate.................................. 750,000.00 ================== A's gross estate tax............... 233,200.00Credit for State death taxes.......... 23,280.00 ------------------ A's net estate tax payable......... 209,920.00 ================``First limitation'' = $209,920.00 ............... $36,393.90 (§ 20.2013-2(b)) x [($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))].......................
| (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):
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B's gross estate.............................. $500,000.00Expenses, indebtedness, etc................... $40,000.00Charitable deduction.......................... 150,000.00Exemption..................................... 60,000.00 ------------- ........... 250,000.00 ------------ B's taxable estate......................... ........... 250,000.00 ============B's gross estate tax....................................... $65,700.00Credit 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):
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B's gross estate.............................. ........... $400,000.00Expenses, indebtedness, etc................... $40,000.00Charitable deduction (§ 20.2013- 117,391.30 3(b))=$150,000.00 - [$150,000.00 x ($200,000.00 - $100,000.00 ÷ $500,000.00 - $40,000.00)]...............................Exemption..................................... 60,000.00 ------------- ........... 217,391.30 ------------B's taxable estate......................................... 182,608.70 ==============B's gross estate tax.......................... 45,482.61Credit for State death taxes.................. 2,221.61 -------------- B's net estate tax payable................. 43,260.00 ============
Subparagraph (1).............................. $61,780.00Less: Subparagraph (2)........................ 43,260.00 ------------- ........... $18,520.00
| (d) Credit of B's estate for tax on prior transfers (§20.2013–1(c)):
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Credit for tax on prior transfers=$18,520.00 (lower of $18,520.00 paragraphs (b) and (c))x100 percent (percentage to be taken into account under § 20.2013-1(c))....................
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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:
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C's gross estate.............................. ........... $250,000.00Expenses, indebtedness, etc................... $50,000.00Exemption..................................... $60,000.00 ------------- ........... $110,000.00 ------------ C's taxable estate......................... ........... 140,000.00 ============C's gross estate tax.......................... ........... 32,700.00Credit 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)) x $9,414.23 [$50,000.00 (§ 20.2013-4) ÷ ($140,000.00 - $31,500.00 - $1,200.00 + $60,000.00) (§ 20.2013- 2(c))]....................................................
| (c) “Second limitation” on credit for B's estate (§20.2013–3(c)):
(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):
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B's gross estate........................................... $350,000.00Expenses, indebtedness, etc................... $40,000.00Charitable deduction (§ 20.2013-3(b)) = 101,086.96 $150,000.00 - [$150,000.00 x ($200,000.00 - $100,000.00 + $50,000.00) ÷ ($500,000.00 - $40,000.00)]...............................Exemption..................................... 60,000.00 ------------- 201,086.96 ------------ B's taxable estate......................... ........... 148,913.04 ------------B's gross estate tax.......................... ........... 35,373.91Credit for State death taxes.................. ........... 1,413.91 ------------ B's net estate tax payable................. ........... 33,960.00 ============
Subparagraph (1).............................. $61,780.00Less: Subparagraph (2)........................ 33,960.00 ------------- ........... $27,820.00
| (4) Apportionment of “second limitation” on credit:
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Transfer from A (§ 20.2013-4)......................... $100,000.00Transfer from C (§ 20.2013-4)......................... 50,000.00 ------------ Total................................................... 150,000.00Portion of ``second limitation'' attributable to transfer 18,546.67 from A (100/150 of $27,820.00)............................Portion of ``second limitation'' attributable to transfer 9,273.33 from C (50/150 of $27,820.00).............................
| (d) Credit of B's estate for tax on prior transfers (§20.2013–1(c)):
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Credit for tax on transfer from A= $18,546.67 (lower of ``first limitation'' computed in $18,546.67 paragraph (b)(1) and ``second limitation'' apportioned to A's transfer in paragraph (c)(4)) x 100 percent (percentage to be taken into account under § 20.2013- 1(c))....................................................Credit for tax on transfer from C= $9,273.33 (lower of ``first limitation'' computed in 7,418.66 paragraph (b)(2) and ``second limitation'' apportioned to B's transfer in paragraph (c)(4)) x 80 percent (percentage to be taken into account under § 20.2013- 1(c)).................................................... ----------- Total credit for tax on prior transfers................... 25,965.33
