[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: 26CFR20.2013-5]

[Page 248-249]
 
                       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.  20.2013-5  ``Property'' and ``transfer'' defined.

    (a) For purposes of section 2013 and Sec.  Sec.  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

[[Page 249]]

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:

    Example: A devises Blackacre to B, as trustee, with directions to 
pay the income therefore to C, his son, for life. Upon C's death. 
Blackacre is to be sold. C is given a general testamentary power, to 
appoint one-third of the proceeds, and a testamentary power, which is 
not a general power, to appoint the remaining two-thirds of the 
proceeds, to such of the issue of his sister D as he should choose. D 
has a daughter, E, and a son, F. Upon his death, C exercised his general 
power by appointing one-third of the proceeds to D and his special power 
by appointing two-thirds of the proceeds to E. Since B's interest in 
Blackacre as a trustee is not a beneficial interest, no part of it is 
``property'' for purpose of the credit in B's estate. On the other hand, 
C's life estate and his testamentary power over the one-third interest 
in the remainder constitute ``property'' received from A for purpose of 
the credit in C's estate. Likewise, D's one-third interest in the 
remainder received through the exercise of C's general power of 
appointment is ``property'' received from C for purpose of the credit in 
D's estate. No credit is allowed E's estate for the property which 
passed to her from C since the property was not included in C's gross 
estate. On the other hand, no credit is allowed in E's estate for 
property passing to her from A since her interest was not susceptible of 
valuation at the time of A's death (see Sec.  20.2013-4).