[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: 26CFR20.2013-6] [Page 249-250] 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. 20.2013-6 Examples. The application of Sec. Sec. 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 (Sec. 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 ............... $36,393.90 (Sec. 20.2013-2(b)) x [($200,000.00 - $100,000.00) (Sec. 20.2013-4) / ($750,000.00 - $209,920.00 - $23,280.00 + $60,000.00) (Sec. 20.2013-2(c))]....................... (c) ``Second limitation'' on credit for B's estate (Sec. 20.2013- 3): (1) B's net estate tax payable as described in Sec. 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 [[Page 250]] 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 Sec. 20.2013-3(a)(2) (previously taxed transfer excluded): B's gross estate.............................. ........... $400,000.00 Expenses, indebtedness, etc................... $40,000.00 Charitable deduction (Sec. 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....................................... 45,482.61 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 (d) Credit of B's estate for tax on prior transfers (Sec. 20.2013- 1(c)): 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 Sec. 20.2013-1(c)).................... 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 (Sec. 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 (Sec. 20.2013-2(b)) x $9,414.23 [$50,000.00 (Sec. 20.2013-4) / ($140,000.00 - $31,500.00 - $1,200.00 + $60,000.00) (Sec. 20.2013-2(c))].......... (c) ``Second limitation'' on credit for B's estate (Sec. 20.2013- 3(c)): (1) B's net estate tax payable as described in Sec. 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 Sec. 20.2013-3(a)(2) (previously taxed transfers excluded): B's gross estate........................................... $350,000.00 Expenses, indebtedness, etc................... $40,000.00 Charitable deduction (Sec. 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.......................... ........... 35,373.91 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 (Sec. 20.2013-4)......................... $100,000.00 Transfer from C (Sec. 20.2013-4)......................... 50,000.00 ------------ Total................................................... 150,000.00 Portion 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 (Sec. 20.2013- 1(c)): 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 Sec. 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 Sec. 20.2013- 1(c)).................................................... ----------- Total credit for tax on prior transfers................... 25,965.33 [[Page 251]]