Sec. 861. (a) Deductions al- Sec. 861. (a) Deductions allowed. For the purpose of the lowed.-For the purpose of the tax the value of the net estate tax the value of the net estate shall be determined, in the case shall be determined, in the case of a nonresident not a citizen of of a nonresident not a citizen of the United States, by deducting the United States, by deducting from the value of that part of his from the value of that part of his gross estate (determined as pro- gross estate (determined as provided in section 811), which at the vided in section 811), which at the time of his death is situated in the time of his death is situated in the United States.United States.- Sec. 861. (a) (1) Expenses, Sec. 861. (a) (1) Expenses, losses, indebtedness, and taxes. losses, indebtedness, and taxes.— That proportion of the deductions specified in subsection (b) of section 812 which the value of such part bears to the value of his entire gross estate, wherever situated. That proportion of the deductions Estates of Decedents Dying on or before Feb. 10, 1939 Sec. 303. (b). See p. 500, Eighth Edition. Sec. 303. (b) (1). See p. 500, Eighth Edition. Sec. 861. (a) (2) Property pre- Sec. 861. (a) (2) Property previously taxed.-An amount equal viously taxed.-An amount equal to the value of any property (A) to the value of any property (A) forming a part of the gross estate forming a part of the gross estate situated in the United States of situated in the United States of any person who died within five any person who died within five years prior to the death of the years prior to the death of the decedent, or (B) transferred to the decedent, or (B) transferred to the decedent by gift within five years decedent by gift within five years prior to his death, where such prior to his death, where such property can be identified as hav- property can be identified as having been received by the decedent ing been received by the decedent from the donor by gift, or from from the donor by gift, or from such prior decedent by gift, be- such prior decedent by gift, bequest, devise, or inheritance, or quest, devise, or inheritance, or which can be identified as having which can be identified as having been acquired in exchange for been acquired in exchange for property so received. This deduc- property so received. This deduction shall be allowed only where tion shall be allowed only where a gift tax imposed under chapter a gift tax imposed under chapter 4, or under Title III of the Reve- 4, or under Title III of the Revenue Act of 1932, 47 Stat. 245, or nue Act of 1932, 47 Stat. 245, or an estate tax imposed under this an estate tax imposed under this Estates of Decedents Estates of Decedents Estates of Decedents described in this paragraph shall, described in this paragraph shall, subchapter, the Revenue Act of for the purposes of this paragraph, for the purposes of this paragraph, 1926, 44 Stat. 69, or any prior Act be considered a bequest of such be considered a bequest of such of Congress, was finally deterprior decedent or gift of such prior decedent or gift of such donor. mined and paid by or on behalf donor. This deduction shall be al- This deduction shall be allowed only of such donor, or the estate of lowed only where a gift tax im- where a gift tax imposed under such prior decedent, as the case posed under chapter 4, or under Chapter 4, or under Title III of the may be, and only in the amount Title III of the Revenue Act of Revenue Act of 1932, 47 Stat. 245, finally determined as the value of 1932, 47 Stat. 245, or an estate tax or an estate tax imposed under this such property in determining the imposed under this chapter or any chapter subchapter, the Revenue Act value of the gift, or the gross esprior Act of Congress, was finally of 1926, 44 Stat. 69, or any prior Act tate of such prior decedent, and determined and paid by or on behalf of Congress, was finally deter- only to the extent that the value of such donor, or the estate of mined and paid by or on behalf of such property is included in such prior decedent, as the case of such donor, or the estate of that part of the decedent's gross may be, and only in the amount such prior decedent, as the case estate which at the time of his finally determined as the value of may be, and only in the amount death is situated in the United such property in determining the finally determined as the value of States, and only if in determining value of the gift, or the gross es- such property in determining the the value of the net estate of the tate of such prior decedent, and value of the gift, or the gross es- prior decedent no deduction was only to the extent that the value tate of such prior decedent, and allowable under this paragraph in of such property is included in only to the extent that the value respect of the property or propthat part of the decedent's gross of such property is included in erty given in exchange therefor estate which at the time of his that part of the decedent's gross Where a deduction was allowed of death is situated in the United estate which at the time of his any mortgage or other lien in deStates, and only if in determining death is situated in the United termining the gift tax, or the es the value of the net estate of the States, and only if in determining tate tax of the prior decedent. prior decedent no deduction was the value of the net estate of the which was paid in whole or in allowable under this paragraph, prior decedent no deduction was part prior to the decedent's death, section 812 (c), or the correspond- allowable under this paragraph, sec- then the deduction allowable under ing provisions of any prior Act of tion 812 (c), or the corresponding this paragraph shall be reduced by Congress, in respect of the prop-provisions of any prior Act of Con- the amount so paid. The deducerty or property given in exchange gress, in respect of the property or tion allowable under this paratherefor. Where a deduction was property given in exchange therefor. graph shall be reduced by an allowed of any mortgage or other Where a deduction was allowed of amount which bears the same ratio lien in determining the gift tax, or any mortgage or other lien in de- to the amounts allowed as deduc the estate tax of the prior decedent, termining the gift tax, or the es- tions under paragraphs (1) and which was paid in whole or in tate tax of the prior decedent, (3) of this subsection as the part prior to the decedent's death, which was paid in whole or in amount otherwise deductible under then the deduction allowable under part prior to the decedent's death, this paragraph bears to the value this paragraph shall be reduced by then the deduction allowable under of that part of the decedent's the amount so paid. The deduction this paragraph shall be reduced by gross estate which at the time of under this paragraph shall be re- the amount so paid. The dedue his death is situated in the United duced by an amount which bears tion allowable under this para States. Where the property rethe same ratio to the amounts al- graph shall be reduced by an ferred to in this paragraph con lowed as deductions under para- amount which bears the same ratio sists of two or more items the ag graphs (3) and (4) and the amount to the amounts allowed as dedue gregate value of such items shall of general claims allowed as deduc- tions under paragraphs (1) and be used for the purpose of comtion under paragraph (1) of this (3) of this subsection as the puting the deduction. subsection as the amount otherwise amount otherwise deductible under deductible under this paragraph this paragraph bears to the value bears to property subject to gen- of that part of the decedent's eral claims. If the property includible in the gross estate to which the gross estate which at the time of his death is situated in the United deduction under the paragraph is Statee. The deduction under this attributable is not wholly property subject to general claimsparagraph shall be reduced by an amount which bears the same ratio to the amounts allowed as deductions under paragraphs (3) and (4) and the amount of general claims allowed as deduction under paragraph (1) of this subsection as the amount otherwise deductible under this paragraph bears to property subject to general claims. If the Sec. 861 (a) (2), I. R. C., supra, amended by Sec. 1, H. J. Res. 60, approved March 17, 1941, by adding language in italics. Sec. 2 of said H. J. Res. 60 makes amendment effective as if such section as amended had been enacted in the I. R. C. on Feb. 10. 1939. finally determined as the value of subchapter, the Revenue Act of subchapter, the Revenue Act of Sec. 861 (a) (2), I. R. C., supra, amended by Sec. 1, H. J. Res. 60, approved March 17, 1941, by adding language in italics. Sec. 2 of said H. J. Res. 60 makes amendment effective as if such section as amended had been enacted in the I. R. C. on Feb. 10, 1939. this paragraph bears to the value Sec. 861 (a) (2), I. R. C., Estates of Decedents Dying on or before Feb. 10, 1939 Estates of Decedents (A) before the application of the preceding sentence, the amount of the deduction under this paragraph shall be reduced by that part of such amount as the value, at the time of the decedent's death, of such property (to which such deduction is attributable) subject to claims but not to general claims is of the value, at the time of the decedent's death, of such property, and (B) in the application of the preceding sentence in reducing the balance, if any, of such deduction, "the amount otherwise deductible under this paragraph" shall be only that part of such amount otherwise deductible (determined without regard to subparagraph (A)) as the value at the time of the decedent's death, of such property (to which such deduction is attributable) subject to general claims is of the value, at the time of the decedent's death, of such property. Estates of Decedents property includible in the gross es- (A) before the application of the (B) in the application of the preceding sentence in reducing the balance, if any, of such deduction, "the amount otherwise deductible under this paragraph" shall be only that part of such amount otherwise deductible (determined without regard to subparagraph (A)) as the value, at the time of the decedent's death, of such property (to which such deduction is attributable) subject to general claims is of the value, at the time of the decedent's death, of such property. For the purposes of the two pre- For the purposes of the two pre- Estates of Decedents |