EFFECTIVE Date of 1962 AMENDMENT Amendment by Pub. L. 87-834 applicable, except as otherwise provided, to the estates of decedents dying after Oct. 16, 1962, see section 18(b) of Pub. L. 87-834, set out as a note under section 2031 of this title. CROSS REFERENCES Credit for tax on prior transfers, see section 2013 of this title. Liability of recipient of property over which decedent had power of appointment, see section 2207 of this title. Special liens for estate and gift taxes, see section 6324 of this title. Taxable estate of nonresidents not citizens, see section 2106 of this title. Transfers for public, charitable, and religious uses, see section 2055 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 2013, 2037, 2043, 2045, 2055, 2106, 2207, 6324 of this title. § 2042. Proceeds of life insurance The value of the gross estate shall include the value of all property (1) Receivable by the executor To the extent of the amount receivable by the executor as insurance under policies on the life of the decedent. (2) Receivable by other beneficiaries To the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in conjunction with any other person. For purposes of the preceding sentence, the term "incident of ownership" includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversionary interest exceeded 5 percent of the value of the policy immediately before the death of the decedent. As used in this paragraph, the term "reversionary interest" includes a possibility that the policy, or the proceeds of the policy, may return to the decedent or his estate, or may be subject to a power of disposition by him. The value of a reversionary interest at any time shall be determined (without regard to the fact of the decedent's death) by usual methods of valuation, including the use of tables of mortality and actuarial principles, pursuant to regulations prescribed by the Secretary. In determining the value of a possibility that the policy or proceeds thereof may be subject to a power of disposition by the decedent, such possibility shall be valued as if it were a possibility that such policy or proceeds may return to the decedent or his estate. (Aug. 16, 1954, ch. 736, 68A Stat. 387; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1906(b)(13) (A), 90 Stat. 1834.) AMENDMENTS 1976-Pub. L. 94-455 struck out "or his delegate" following "Secretary". SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 2035, 2045, 6324 of this title. § 2043. Transfers for insufficient consideration (a) In general If any one of the transfers, trusts, interests, rights, or powers enumerated and described in sections 2035 to 2038, inclusive, and section 2041 is made, created, exercised, or relinquished for a consideration in money or money's worth, but is not a bona fide sale for an adequate and full consideration in money or money's worth, there shall be included in the gross estate only the excess of the fair market value at the time of death of the property otherwise to be included on account of such transaction, over the value of the consideration received therefor by the decedent. (b) Marital rights not treated as consideration For purposes of this chapter, a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent's property or estate, shall not be considered to any extent a consideration "in money or money's worth." (Aug. 16, 1954, ch. 736, 68A Stat. 388.) SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 2053 of this title. § 2044. Certain property for which marital deduction was previously allowed (a) General rule The value of the gross estate shall include the value of any property to which this section applies in which the decedent had a qualifying income interest for life. (b) Property to which this section applies This section applies to any property if— (1) a deduction was allowed with respect to the transfer of such property to the decedent (A) under section 2056 by reason of subsection (b)(7) thereof, or (B) under section 2523 by reason of subsection (f) thereof, and (2) section 2519 (relating to dispositions of certain life estates) did not apply with respect to a disposition by the decedent of part or all of such property. (c) Property treated as having passed from decedent For purposes of this chapter and chapter 13, property includible in the gross estate of the decedent under subsection (a) shall be treated as property passing from the decedent. (Added Pub. L. 97-34, title IV, § 403(d)(3)(A)(i), Aug. 13, 1981, 95 Stat. 304, and amended Pub. L. 97-448, title I, § 104(a)(1)(B), Jan. 12, 1983, 96 Stat. 2380.) PRIOR PROVISIONS A prior section 2044 was renumbered section 2045 of this title. AMENDMENTS 1983-Subsec. (c). Pub. L. 97-448 added subsec. (c). EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title. EFFECTIVE DATE Section applicable to the estates of decedents dying after Dec. 31, 1981, see section 403(e) of Pub. L. 97-34, set out as an Effective Date of 1981 Amendment note under section 2056 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 1014, 2207A, 2523 of this title. § 2045. Prior interests Except as otherwise specifically provided by law, sections 2034 to 2042, inclusive, shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whenever made, created, arising, existing, exercised, or relinquished. (Aug. 16, 1954, ch. 736, 68A Stat. 388, § 2044; Oct. 4, 1976, Pub. L. 94-455, title XX, § 2001(c)(1)(M), 90 Stat. 1853; renumbered § 2045, Aug. 13, 1981, Pub. L. 97-34, title IV, § 403(d)(3)(A)(i), 95 Stat. 304.) Repeal of section applicable to estates of decedents dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2001 of this title. § 2053. Expenses, indebtedness, and taxes (a) General rule For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate such amounts (1) for funeral expenses, (2) for administration expenses, (4) for unpaid mortgages on, or any indebtedness in respect of, property where the value of the decedent's interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate, as are allowable by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered. (b) Other administration expenses Subject to the limitations in paragraph (1) of subsection (c), there shall be deducted in determining the taxable estate amounts representing expenses incurred in administering property not subject to claims which is included in the gross estate to the same extent such amounts would be allowable as a deduction under subsection (a) if such property were subject to claims, and such amounts are paid before the expira tion of the period of limitation for assessment provided in section 6501. (c) Limitations (1) Limitations applicable to subsections (a) and (b) (A) Consideration for claims The deduction allowed by this section in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded on a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth; except that in any case in which any such claim is founded on a promise or agreement of the decedent to make a contribution or gift to or for the use of any donee described in section 2055 for the purposes specified therein, the deduction for such claims shall not be so limited, but shall be limited to the extent that it would be allowable as a deduction under section 2055 if such promise or agreement constituted a bequest. (B) Certain taxes Any income taxes on income received after the death of the decedent, or property taxes not accrued before his death, or any estate, succession, legacy, or inheritance taxes, shall not be deductible under this section. (2) Limitations applicable only to subsection (a) In the case of the amounts described in subsection (a), there shall be disallowed the amount by which the deductions specified therein exceed the value, at the time of the decedent's death, of property subject to claims, except to the extent that such deductions represent amounts paid before the date prescribed for the filing of the estate tax return. For purposes of this section, the term "property subject to claims" means property includible in the gross estate of the decedent which, or the avails of which, would under the applicable law, bear the burden of the payment of such deductions in the final adjustment and settlement of the estate, except that the value of the property shall be reduced by the amount of the deduction under section 2054 attributable to such property. (d) Certain State and foreign death taxes (1) General rule Notwithstanding the provisions of subsection (c)(1)(B) of this section, for purposes of the tax imposed by section 2001 the value of the taxable estate may be determined, if the executor so elects before the expiration of the period of limitation for assessment provided in section 6501, by deducting from the value of the gross estate the amount (as determined in accordance with regulations prescribed by the Secretary) of— (A) Any estate, succession, legacy, or inheritance tax imposed by a State or the District of Columbia upon a transfer by the decedent for public, charitable, or religious uses described in section 2055 or 2106(a)(2), and (B) any estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country, in respect of any property situated within such foreign country and included in the gross estate of a citizen or resident of the United States, upon a transfer by the decedent for public, charitable, or religious uses described in section 2055. The determination under subparagraph (B) of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States. Any election under this paragraph shall be exercised in accordance with regulations prescribed by the Secretary. (2) Condition for allowance of deduction No deduction shall be allowed under paragraph (1) for a State death tax or a foreign death tax specified therein unless the decrease in the tax imposed by section 2001 which results from the deduction provided in paragraph (1) will inure solely for the benefit of the public, charitable, or religious transferees described in section 2055 or section 2106(a)(2). In any case where the tax imposed by section 2001 is equitably apportioned among all the transferees of property included in the gross estate, including those described in sections 2055 and 2106(a)(2) (taking into account any exemptions, credits, or deductions allowed by this chapter), in determining such decrease, there shall be disregarded any decrease in the Federal estate tax which any transferees other than those described in sections 2055 and 2106(a)(2) are required to pay. (3) Effect on credits for State and foreign death taxes of deduction under this subsection (A) Election An election under this subsection shall be deemed a waiver of the right to claim a credit, against the Federal estate tax, under a death tax convention with any foreign country for any tax or portion thereof in respect of which a deduction is taken under this subsection. (B) Cross references See section 2011(e) for the effect of a deduction taken under this subsection on the credit for State death taxes, and see section 2014(f) for the effect of a deduction taken under this subsection on the credit for foreign death taxes. (e) Marital rights For provisions that relinquishment of marital rights shall not be deemed a consideration "in money or money's worth," see section 2043(b). (Aug. 16, 1954, ch. 736, 68A Stat. 389; Feb. 20, 1956, ch. 63, § 2, 70 Stat. 23; Sept. 2, 1958, Pub. L. 85-866, title I, § 102(c)(3), 72 Stat. 1674; Aug. 21, 1959, Pub L. 86-175, § 1, 73 Stat. 396; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1902(a)(12) (B), 1906(b)(13)(A), 90 Stat. 1806, 1834.) AMENDMENTS 1976-Subsec. (d)(1). Pub. L. 94-455 struck out "or his delegate" following "Secretary" in the provisions preceding subpar. (A) and following subpar. (B) and struck out "or Territory" following "a State" in subpar. (A). 1959-Subsec. (d). Pub. L. 86-175 inserted a reference to foreign death taxes in the heading of the subsection and par. (3) and in the text of par. (2), redesignated provisions of par. (1) as par. (1)(A) and sentence pertaining to exercise of privilege of election, added par. (2) and sentence for determining location of property, redesignated provisions of par. (3) as par. (3)(B) in part, and added par. (3)(A) and the part of (B) relating to foreign death taxes. 1958-Subsec. (d)(1). Pub. L. 85-866 eliminated "or any possession of the United States," following "District of Columbia,". 1956-Subsecs. (d), (e). Act Feb. 20, 1956, added subsec. (d) and redesignated former subsec. (d) as (e). EFFECTIVE DATE OF 1959 AMENDMENT Section 4 of Pub. L. 86-175 provided that: "The amendments made by the preceding sections of this Act [amending sections 2011, 2014, and 2053 of this title] shall apply with respect to the estates of decedents dying on or after July 1, 1955." EFFECTIVE DATE OF 1958 Amendment Amendment of subsec. (d)(1) by Pub. L. 85-866 applicable to estates of decedents dying after Sept. 2, 1958, see section 102(d) of Pub. L. 85-866, set out as a note under section 2011 of this title. EFFECTIVE DATE OF 1956 AMENDMENT Section 4 of act Feb. 20, 1956, provided that: "The amendments to the Internal Revenue Code of 1954 made by sections 2 and 3 of this Act (amending sections 2011(e) and 2053 of this title], and provisions having the same effect as this amendment, which shall be considered to be included in chapter 3 of the Internal Revenue Code of 1939, shall apply to the estates of all decedents dying after December 31, 1953." CROSS REFERENCES Computation of adjusted gross estate, see section 2056 of this title. Credit for tax on prior transfers, see section 2013 of this title. Income tax, special rules for credits and deductions, see section 642 of this title. Medical care deductions of decedents for income tax purposes, effect of allowance under this section, see section 213 of this title. Taxable estate of nonresidents not citizens, see section 2106 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 213, 303, 642, 2011, 2013, 2014, 2032A, 2106, 2602, 6166 of this title. § 2054. Losses For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate losses incurred during the settlement of estates arising from fires, storms, shipwrecks, or other casualties, or from theft, when such losses are not compensated for by insurance or otherwise. (Aug. 16, 1954, ch. 736, 68A Stat. 390.) CROSS REFERENCES Computation of adjusted gross estate, see section 2056 of this title. Credit for tax on prior transfers, see section 2013 of this title. Income tax, special rules for credits and deductions, see section 642 of this title. Taxable estate of nonresidents not citizens, see section 2106 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 303, 642, 2013, 2053, 2106, 2602, 6166 of this title. § 2055. Transfers for public, charitable, and religious uses (a) In general For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of all bequests, legacies, devises, or transfers (1) to or for the use of the United States, any State, any political subdivision thereof, or the District of Columbia, for exclusively public purposes; (2) to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office; (3) to a trustee or trustees, or a fraternal society, order, or association operating under the lodge system, but only if such contributions or gifts are to be used by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, such trust, fraternal society, order, or association would not be disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and such trustee or trustees, or such fraternal society, order, or association, does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office; or (4) to or for the use of any veterans' organization incorporated by Act of Congress, or of its departments or local chapters or posts, no part of the net earnings of which inures to the benefit of any private shareholder or individual. For purposes of this subsection, the complete termination before the date prescribed for the filing of the estate tax return of a power to consume, invade, or appropriate property for the benefit of an individual before such power has been exercised by reason of the death of such individual or for any other reason shall be con sidered and deemed to be a qualified disclaimer with the same full force and effect as though he had filed such qualified disclaimer. Rules similar to the rules of section 501(j) shall apply for purposes of paragraph (2). (b) Powers of appointment Property includible in the decedent's gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent. (c) Death taxes payable out of bequests If the tax imposed by section 2001, or any estate, succession, legacy, or inheritance taxes, are, either by the terms of the will, by the law of the jurisdiction under which the estate is administered, or by the law of the jurisdiction imposing the particular tax, payable in whole or in part out of the bequests, legacies, or devises otherwise deductible under this section, then the amount deductible under this section shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes. (d) Limitation on deduction The amount of the deduction under this section for any transfer shall not exceed the value of the transferred property required to be included in the gross estate. (e) Disallowance of deductions in certain cases (1) No deduction shall be allowed under this section for a transfer to or for the use of an organization or trust described in section 508(d) or 4948(c)(4) subject to the conditions specified in such sections. (2) Where an interest in property (other than an interest described in section 170(f)(3)(B)) passes or has passed from the decedent to a person, or for a use, described in subsection (a), and an interest (other than an interest which is extinguished upon the decedent's death) in the same property passes or has passed (for less than an adequate and full consideration in money or money's worth) from the decedent to a person, or for a use, not described in subsection (a), no deduction shall be allowed under this section for the interest which passes or has passed to the person, or for the use, described in subsection (a) unless (A) in the case of a remainder interest, such interest is in a trust which is a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664) or a pooled income fund (described in section 642(c)(5)), or (B) in the case of any other interest, such interest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair market value of the property (to be determined yearly). (3) In the case of a will executed before December 31, 1978, or a trust created before such date, if a deduction is not allowable at the time of the decedent's death because of the failure of an interest in property which passes from the decedent to a person, or for a use, described in subsection (a) to meet the requirements of subparagraph (A) or (B) of paragraph (2) of this subsection, and if the governing instrument is amended or conformed on or before December 31, 1981, or, if later, on or before the 30th day after the date on which judicial proceedings begun on or before December 31, 1981, (which are required to amend or conform the governing instrument), become final, so that the interest is in a trust which meets the requirements of such subparagraph (A) or (B) (as the case may be), a deduction shall nevertheless be allowed. The Secretary may, by regulation, provide for the application of the provisions of this paragraph to trusts whose governing instruments are amended or conformed in accordance with this paragraph, and such regulations may provide for any adjustments in the application of the provisions of section 508 (relating to special rules with respect to section 501(c)(3) organizations), subchapter J (relating to estates, trusts, beneficiaries, and decedents), and chapter 42 (relating to private foundations), to such trusts made necessary by the application of this paragraph. If, by the due date for the filing of an estate tax return (including any extension thereof), the interest is in a charitable trust which, upon allowance of a deduction, would be described in section 4947(a)(1), or the interest passes directly to a person or for a use described in subsection (a), a deduction shall be allowed as if the governing instrument was amended or conformed under this paragraph. If the amendment or conformation of the governing instrument is made after the due date for the filing of the estate tax return (including any extension thereof), the deduction shall be allowed upon the filing of a timely claim for credit or refund (as provided for in section 6511) of an overpayment resulting from the application of this paragraph. In the case of a credit or refund as a result of an amendment or conformation made pursuant to this paragraph, no interest shall be allowed for the period prior to the expiration of the 180th day after the date on which the claim for credit or refund is filed. (4) Works of art and their copyrights treated as separate properties in certain cases (A) In general In the case of a qualified contribution of a work of art, the work of art and the copyright on such work of art shall be treated as separate properties for purposes of paragraph (2). (B) Work of art defined For purposes of this paragraph, the term "work of art” means any tangible personal property with respect to which there is a copyright under Federal law. (C) Qualified contribution defined For purposes of this paragraph, the term "qualified contribution" means any transfer of property to a qualified organization if the use of the property by the organization is related to the purpose or function constituting the basis for its exemption under section 501. 11-610 0-83--3 |