81.87 81.88 81.89 81.90 81.91 81.92 81.93 81.94 81.95 81.96 81.97 81.98 81.99 81.100 81.101 81.102 Nature of penalties. Penalties for false or fraudulent no- Penalty for failure to give notice or property, keep or exhibit records, etc., and for concealment of assets. Penalty for assisting, procuring, or advising the preparation or presentation of false or fraudulent documents. Claim for abatement. Accrual of interest as affected by the Limitation of time to file bond to stay collection of jeopardy assessment. Claim for refund. Payment of claims and interest. Securing evidence; taking testimony. Power to compel compliance. Remedies for collection and administrative proceedings for enforcing liability of a transferee or fiduciary. 81.103 Executor's duty to keep records. 81.104 Executor's duty to render statements. 81.105 Notice of persons acting as fiduciary. AUTHORITY: §§ 81.1 to 81.105 issued under 53 Stat. 467; 26 U. S. C. 3791. SOURCE: §§ 81.1 to 81.105 contained in Regulations 105, 7 F. R. 1429, except as noted following sections affected. lations (including Treasury decisions) applicable under any provision of law in effect prior to February 11, 1939. Such prior regulations remain in full force and effect and continue to apply to estate taxes on the estates of decedents dying prior to February 11, 1939. DESCRIPTION OF THE TAX § 81.2 General description. (a) Federal estate taxation under the Internal Revenue Code (chapter 3), applicable to estates of decedents dying on or after February 11, 1939, consists of, first, the basic tax, second, the additional tax, and, third, if the decedent died after June 25, 1940, and before September 21, 1941, the defense tax. Prior estate tax statutes are applicable to the estates of decedents who died before February 11, 1939. (b) The basic estate tax is imposed under subchapter A (Part II, section 810, estates of citizens or residents of the United States, and Part III, section 860, estates of nonresidents not citizens of the United States). The additional estate tax is imposed under subchapter B (section 935). The defense tax, imposed under subchapter C (section 951), as added by the Revenue Act of 1940 and repealed by the Revenue Act of 1941, is applicable to estates of decedents who died after June 25, 1940, and before September 21, 1941. (c) A credit is authorized against the basic estate tax (not in excess of 80 percent thereof) for estate, inheritance, legacy, or succession taxes paid a State, Territory, or the District of Columbia (or, if the decedent died after June 29, 1939, a possession of the United States). For the purpose of the basic estate tax, a specific exemption of $100,000 is authorized in the case of a resident or citizen of the United States, and a specific exemption of $2,000 is authorized in the case of a nonresident not a citizen of the United States who died after October 21, 1942, the date of the enactment of the Revenue Act of 1942. No specific exemption is authorized in the case of a nonresident not a citizen of the United States who died on or before October 21, 1942. (d) No credit is allowable against the additional estate tax for estate, inheritance, legacy, or succession taxes paid a State, Territory, the District of Columbia, or any possession of the United States. For the purpose of the additional tax, in the case of a resident or citizen, a specific exemption of $60,000 is authorized if the decedent died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, or $40,000 if the decedent died on or before such date. In the case of a nonresident not a citizen a specific exemption of $2,000 is authorized if the decedent died after October 21, 1942, but no specific exemption is allowed if the decedent died on or before such date. (e) Credits for Federal gift taxes are, under certain conditions and limitations, allowable against both the basic and the additional estate taxes. (f) The Federal estate tax is neither a property nor an inheritance tax. It is imposed upon the transfer of the entire net estate and not upon any particular legacy, device, or distributive share. The relationship of the beneficiary to the decedent has no bearing on the question of liability or the extent thereof. [Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024] § 81.3 Gross estate. In addition to the general provisions of subsection (a) of section 811 requiring the inclusion in the gross estate of property (except real property situated outside the United States) to the extent of the interest therein of the decedent, other subsections of section 811 more specifically include in the gross estate for the purpose of the estate tax, as more fully explained hereafter in this part, certain transfers made during the decedent's life without an adequate and full consideration in money or money's worth, joint estates with right of survivorship, tenancies by the entirety, community property, life insurance even though payable to beneficiaries other than the estate, property over which the decedent possessed a power of appointment, and dower or curtesy of the surviving spouse or statutory estate in lieu thereof. [T. D. 5239, 8 F. R. 3024] § 81.4 Net estate. The term "net estate" has a distinct meaning in the statute, signifying the difference between the total value of the gross estate and the total amount of the authorized deductions. There is no basis for tax if the value of the gross estate does not exceed the total amount of the authorized deductions, but whether taxable or not, a return must be filed for every estate, unless the value of the gross estate at the date of the decedent's death does not exceed the amount of the applicable specific exemption. For regulations relative to the specific exemption in the case of a resident or citizen see § 81.48, and in the case of a nonresident not a citizen see § 81.55. [Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024] § 81.5 Definition of "resident" and "nonresident." (a) A resident is one who, at the time of his death, had his domicile in the United States; or one who was a citizen of the United States at the time of death and with respect to whose property any probate or administration proceedings are had in the United States Court for China. (See section 851.) A missionary who, at the time of death, was serving as such under a foreign missionary board of any religious denomination in the United States, will be presumed to have died a resident of the United States, if domiciled therein at the time of his or her commission and departure for such service, and not a nonresident merely by reason of his or her intention to remain permanently in such service. (See section 850.) (b) All persons not residents of the United States as defined in paragraph (a) of this section, or to whom the presumption just stated does not apply, are nonresidents. (c) Section 3797 (a) (9) of the Internal Revenue Code provides that (where not otherwise distinctly expressed or manifestly incompatible with the intent thereof) the term "United States" when used in a geographical sense includes only the States, the Territories of Alaska and Hawaii, and the District of Columbia. (d) A citizen of the United States is a nonresident if his domicile is in Puerto Rico, the Philippine Islands, or otherwise outside the United States as defined in section 3797 (a) (9), whereas a subject or citizen of a foreign country is a resident if his domicile is in the United States; i. e., in any of the States, the Territory of Alaska or Hawaii, or the District of Columbia. A person acquires a domicile in a place by living there, for even a brief period of time, with no definite present intention of later removing therefrom. Residence without the requisite intention to remain indefinitely will not suffice to constitute domicile, nor will intention to change domicile effect such a change unless accompanied by actual removal. (e) Different provisions control the determination of the tax liability of the estates of citizens or residents of the United States and the estates of nonresidents not citizens of the United States. DETERMINATION OF TAX LIABILITY § 81.6 Manner of determining liability. (a) The first step in the determination of tax liability is to ascertain the total value of the decedent's gross estate. (See §§ 81.20 to 81.28, inclusive, also § 81.49.) The second step is to determine the total amount of the deductions authorized and to subtract such total from the value of the gross estate in order to arrive at the value of the net estate. (See §§ 81.29 to 81.48, inclusive, and §§ 81.50 to 81.55, inclusive.) The third step is to compute the tax and any allowable credits. (See §§ 81.7, 81.8, and 81.9.) (b) If the decedent was a resident or citizen of the United States, a net estate computed with a specific exemption of $100,000 must be determined for the purpose of the basic estate tax, and another net estate computed with a specific exemption of $60,000 in case the decedent died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, or $40,000 in case the decedent died on or before October 21, 1942, must be determined for the purpose of the additional estate tax. If the decedent was a nonresident not a citizen of the United States, a net estate computed with a specific exemption of $2,000 must be determined both for the purpose of the basic estate tax and for the purpose of the additional estate tax in case the decedent died after October 21, 1942, but no specific exemption is allowed if such decedent died on or before such date. [Regs. 105, 7 F. R. 1429, as amended by T. D. 5239, 8 F. R. 3024] § 81.7 Rates and computation of tax. (a) Both the basic estate tax and the additional estate tax are computed in accordance with progressively graduated rates. The basic tax schedule pro vides rates from 1 percent on the first $50,000 to 20 percent on any amount in excess of $10,000,000. The additional tax schedule applicable to estates of decedents dying after September 20, 1941, provides rates from 3 percent on the first $5,000 to 77 percent on any amount in excess of $10,000,000. The additional tax schedule applicable to estates of decedents dying on or before September 20, 1941 provides rates from 2 percent on the first $10,000 to 70 percent on any amount in excess of $50,000,000. (b) The gross basic tax is computed, in accordance with the basic tax schedule, on the value of the net estate determined for the purpose of the basic tax. The gross additional tax is ascertained by subtracting the gross basic tax from an amount computed, in accordance with the additional tax schedule applicable, on the value of the net estate determined for the purpose of the additional tax. In the case of a resident or citizen of the United States, the value of the net estate determined for the purpose of the basic tax differs from the value of the net estate determined for the purpose of the additional tax, since for the former a specific exemption of $100,000 is authorized while for the latter the amount of the specific exemption is $60,000 if the decident died after October 21, 1942, the date of the enactment of the Revenue Act of 1942, or $40,000 if the decedent died on or before such date. The (c) The net basic tax is obtained by subtracting any authorized credits for gift, estate, and inheritance taxes from the amount of the gross basic tax. net additional tax is obtained by subtracting any further authorized credit for gift tax from the amount of the gross additional tax. The total estate tax payable is the sum of the net basic tax and the net additional tax unless the decedent died after June 25, 1940, and before September 21, 1941. The defense tax, applicable if the decedent died after June 25, 1940, and before September 21, 1941, is obtained by computing 10 percent of the total of the net basic and net additional taxes. If the decedent died within such period, the sum of the net basic and net additional taxes, plus the defense tax, is the total estate tax payable. (e) Column (A) of the table sets forth the net estates of specified amounts to which the taxes shown in the first subcolumn of each of the numbered columns relate. Column (B) indicates the respective maximum limits to which the rates shown in the second subcolumn of each of the numbered columns are applicable. Column (1) of the table sets forth the gross basic tax upon net estates of specified amounts and the rate for the gross basic tax upon the excess of such amounts. Column (2) of the table sets forth the total gross basic and additional taxes for net estates of specified amounts in the case of decedents dying prior to September 21, 1941, and the rate for the Col total gross basic and additional taxes upon the excess of such amounts. umn (3) of the table sets forth the total gross basic and additional taxes for net estates of specified amounts in the case of decedents dying on or after September 21, 1941, and the rate for the total gross basic and additional taxes upon the excess of such amounts. (f) An illustration of the table's use is as follows: The net estate for the basic estate tax amounts to $1,240,000. By reference to the table it will be seen that the specified amount in column (A) nearest to the value of the decedent's net estate but less than such value is $1,000,000. The tax upon this amount as indicated Part 81 82 86 CHAPTER I-BUREAU OF INTERNAL REVENUE DEPARTMENT OF THE TREASURY (Continued) SUBCHAPTER B-ESTATE AND GIFT TAXES Regulations relating to estate tax. Taxation pursuant to treaties. Gift tax under chapter 4 of Internal Revenue Code, as amended. 130 140 141 142 143 144 150 151 152 153 160 Tax on transfers to avoid income tax. Taxes on safe deposit boxes and on certain transportation and communications services. Taxes on tobacco, snuff, cigars, cigarettes, cigarette papers and tubes, and purchase and sale of leaf tobacco. Shipment or delivery of manufactured tobacco, snuff, cigars, cigarettes, Tax-free withdrawals of cigars from customs bonded warehouses, Class 6. Removal of manufactured tobacco, snuff, cigars, and cigarettes, without Regulations under the Harrison Narcotic Law, as amended. Seizures involving contraband articles covered by section 1 (b) (1) of the Taxes on circulation of banks and bankers and on notes paid out. |