[Code of Federal Regulations]
[Title 26, Volume 14]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR20.2013-2]

[Page 245-246]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 20_ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 
1954--Table of Contents
 
Sec.  20.2013-2  ``First limitation''.

    (a) The amount of the Federal estate tax attributable to the 
transferred

[[Page 246]]

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 Sec.  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:

    Value of transferred property (C) / ``Transferor's adjusted taxable 
estate'' (D) x ``Transferor's adjusted Federal estate tax'' (B).

    (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 Sec.  20.2051-1 in the case of a citizen or 
resident of the United States or of Sec.  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 Sec.  20.2052-1 and paragraph (a)(3) of Sec.  
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 Sec.  20.2013-6.
    (e) For illustrations of the application of this section, see 
examples (1) and (2) set forth in Sec.  20.2013-6.

[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]