(d) Exception in case of motor vehicles(1) Exception. Even though notice of a lien provided in section 6321 has been filed in the manner prescribed in subsection (a) of this section, the lien shall not be valid with respect to a motor vehicle, as defined in paragraph (2) of this subsection, as against any purchaser of such motor vehicle for an adequate and full consideration in money or money's worth if—

(A) At the time of the purchase the purchaser is without notice or knowledge of the existence of such lien, and

(B) Before the purchaser obtains such notice or knowledge, he has acquired possession of such motor vehicle and has not thereafter relinquished possession of such motor vehicle to the seller or his agent.

(2) Definition of motor vehicle. As used in this subsection, the term "motor vehicle" means a self-propelled vehicle which is registered for highway use under the laws of any State or foreign country.

(e) Disclosure of amount of outstanding Hen. If a notice of lien has been filed under subsection (a), the Secretary or his delegate is authorized to provide by rules or regulation the extent to which, and the conditions under which, information as to the amount of the outstanding obligation secured by the lien may be disclosed.

[Sec. 6323 as amended by sec. 236, Revenue Act 1964 (78 Stat. 127)]

[TD. 6296, 23 FR. 4529, June 24, 1958, as amended by TD. 6716, 29 FR. 3757, Mar. 26, 1964]

§ 20.6323-1

Validity against mortgagees, pledgees, purchasers, and judgment creditors.

For regulations concerning the validity of liens against mortgagees, pledgees, purchasers, and judgment creditors, see § 301.6323-1 of this chapter (Regulations on Procedure and Administration). § 20.6324 Statutory provisions; special liens for estate and gift taxes.

SEC. 6324. Special liens for estate and gift taxes-(a) Liens for estate tax. Except as otherwise provided in subsection (c)—

(1) Upon gross estate. Unless the estate tax imposed by chapter 11 is sooner paid in full, or becomes unenforceable by reason of lapse of time, it shall be a lien upon the gross estate of the decedent for 10 years from the date of death, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien.

(2) Liability of transferees and others. If the estate tax imposed by chapter 11 is not paid when due, then the spouse, transferee, trustee (except the trustee of an employees' trust which meets the requirements of section 401(a)), surviving tenant, person in

possession of the property by reason of the exercise, nonexercise, or release of a power of appointment, or beneficiary, who receives, or has on the date of the decedent's death, property included in the gross estate under sections 2034 to 2042, inclusive, to the extent of the value, at the time of the decedent's death, of such property, shall be personally liable for such tax. Any part of such property transferred by (or transferred by a transferee of) such spouse, transferee, trustee, surviving tenant, person in possession, or beneficiary, to a purchaser or holder of a security interest shall be divested of the lien provided in paragraph (1) and a like lien shall then attach to all the property of such spouse, transferee, trustee, surviving tenant, person in possession, or beneficiary, or transferee of any such person, except any part transferred to a purchaser or a holder of a security interest.

(3) Continuance after discharge of fiduciary. The provisions of section 2204 (relating to discharge of fiduciary from personal liability) shall not operate as a release of any part of the gross estate from the lien for any deficiency that may thereafter be determined to be due, unless such part of the gross estate (or any interest therein) has been transferred to a purchaser or a holder of a security interest, in which case such part (or such interest) shall not be subject to a lien or to any claim or demand for any such deflciency, but the lien shall attach to the consideration received from such purchaser or holder of a security interest, by the heirs, legatees, devisees, or distributees.

(c) Exceptions. (1) The lien imposed by subsection (a) or (b) shall not be valid as against a mechanic's lienor and, subject to the conditions provided by section 6323(b) (relating to protection for certain interests even though noticed filed), shall not be valid with respect to any lien or interest described in section 6323(b).

(2) If a lien imposed by subsection (a) or (b) is not valid as against a lien or security interest, the priority of such lien or security interest shall extend to any item described in section 6323 (e) (relating to priority of interest and expenses) to the extent that, under local law, such item has the same priority as the lien or security interest to which it relates.

[Sec. 6324 as amended by sec. 236 (b), (c), Rev. Act 1964 (78 Stat. 127, 128); sec. 102, Federal Tax Lien Act 1966 (80 Stat. 1132); sec. 101 (d) (2), Excise, Estate, and Gift Tax Adjustment Act 1970 (84 Stat. 1837)] [T.D. 7238, 37 F.R. 28724, Dec. 29, 1972]

§ 20.6324-1 Special lien for estate tax.

For regulations concerning the special llen for the estate tax, see § 301.6324-1 of this chapter (Regulations on Procedure and Administration).

§ 20.6325 Statutory provisions; release of lien or partial discharge of prop

erty.

SEC. 6325. Release of lien or partial discharge of property—(a) Release of lien. Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his delegate may issue a certificate of release of any lien imposed with respect to any internal revenue tax i

(1) Liability satisfied or unenforceable. The Secretary or his delegate finds that the liability for the amount assessed, together with all interest in respect thereof, has been fully satisfied or has become legally unenforceable; or

(2) Bond accepted. There is furnished to the Secretary or his delegate and accepted by him a bond that is conditioned upon the payment of the amount assessed, together with all interest in respect thereof, within the time prescribed by law (including any extension of such time), and that is in accordance with such requirements relating to terms, conditions, and form of the bond and sureties thereon, as may be specified by such rules or regulations.

(b) Partial discharge of property-(1) Property double the amount of the liability. Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his delegate may issue a certificate of discharge of any part of the property subject to any lien imposed under this chapter if the Secretary or his delegate finds that the fair market value of that part of such property remaining subject to the lien is at least double the amount of the unsatisfiled liability secured by such lien and the amount of all other liens upon such property which have priority to such lien.

(2) Part payment or interest of United States valueless. Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his delegate may issue a certificate of discharge of any part of the property subject to the lien if—

(A) There is paid over to the Secretary or his delegate in part satisfaction of the liability secured by the lien an amount determined by the Secretary or his delegate, which shall not be less than the value, as determined by the Secretary or his delegate, of the interest of the United States in the part to be so discharged, or

(B) The Secretary or his delegate determines at any time that the interest of the United States in the part to be so discharged has no value.

In determining the value of the interest of the United States in the part to be so discharged, the Secretary or his delegate shall give consideration to the fair market value of such part and to such liens thereon as have priority to the lien of the United States.

(c) Estate or gift tax. Subject to such rules or regulations as the Secretary or his delegate may prescribe, the Secretary or his

delegate may issue a certificate of discharge of any or all of the property subject to any lien imposed by section 6324 if the Secretary or his delegate finds that the liability secured by such lien has been fully satisfied or provided for.

(d) Effect of certificate of release or discharge. A certificate of release or of discharge issued under this section shall be held conclusive that the lien upon the property covered by the certificate is extinguished.

(e) Cross references. (1) For single bond complying with the requirements of both subsection (a) (2) and section 6165, see section 7102.

(2) For other provisions relating to bonds, see generally chapter 73.

(3) For provisions relating to suits to enforce lien, see section 7403.

(4) For provisions relating to suits to clear title to realty, see section 7424. [Sec. 6325 as amended by sec. 77, Technical Amendments Act 1958 (72 Stat. 1662) ]

[T.D. 6296 23 F.R. 4529, June 24, 1958, as amended by T.D. 6526, 26 FR. 418, Jan. 19, 1961]

§ 20.6325-1 Release of lien or partial discharge of property; transfer cer tificates in nonresident estates.

(a) A transfer certificate is a certificate permitting the transfer of property of a nonresident decedent without liability. Except as provided in paragraph (b) of this section, no domestic corporation or its transfer agent should transfer stock registered in the name of a non-resident decedent (regardless of citizenship) except such shares which have been submitted for transfer by a duly qualified executor or administrator who has been appointed and is acting in the United States, without first requiring a transfer certificate covering all of the decedent's stock of the corporation and showing that the transfer may be made without liability. Corporations, transfer agents of domestic corporations, transfer agents of foreign corporations (except as to shares held in the name of a nonresident decedent not a citizen of the United States), banks, trust companies, or other custodians in actual or constructive possession of property, of such a decedent can insure avoidance of liability for taxes and penalties only by demanding and receiving transfer certificates before transfer of property of nonresident decedents.

(b) (1) In the case of a nonresident not a citizen of the United States dying on or after November 14, 1966—

(1) Subject to the provisions of subdivisions (ii) and (iii) of this subpara

graph, a transfer certificate is not required with respect to the transfer of any property of the decedent if the value on the date of his death of that part of his gross estate situated in the United States did not exceed $30,000.

(ii) If the transfer of the estate is subject to the tax imposed by section 2107(a) (relating to expatriation to avoid tax), any amounts which are includible in the decedent's gross estate under section 2107(b) are to be added to the value on the date of his death of that part of his gross estate situated in the United States, for purposes of determining under subdivision (i) of this subparagraph whether his gross estate did or did not exceed $30,000 in value on the date of his death.

(iii) If the transfer of the estate is subject to tax pursuant to a Presidential proclamation made under section 2108 (a) (relating to Presidential proclamations of the application of pre-1967 estate tax provisions), a transfer certificate is not required with respect to the transfer of any property of the decedent if the value on the date of his death of that part of his gross estate situated in the United States did not exceed $2,000.

(2) In the case of a nonresident not a citizen of the United States dying before November 14, 1966, a transfer certificate is not required with respect to the transfer of (i) any property of the decedent, if the value on the date of his death of that part of his gross estate situated in the United States did not exceed $2,000, or (ii) bonds owned by such a decedent if it is shown that the bonds were not physically situated in the United States at the time of his death.

(3) A corporation, transfer agent, bank, trust company, or other custodian will not incur liability for a transfer of the decedent's property without a transfer certificate if the corporation or other person, having no information to the contrary, first receives from the executor or other responsible person, who may be reasonably regarded as in possession of the pertinent facts, a statement of the facts relating to the estate showing that the sum of the value on the date of the decedent's death of that part of his gross estate situated in the United States, and, if applicable, any amounts includible in his gross estate under section 2107(b), is such an amount that, pursuant to the provisions of subparagraph (1) or subparagraph (2)(1) of this paragraph, a transfer certificate is not required.

(4) For the determination of the gross estate situated in the United States, see §§ 20.2103-1 and 20.2104–1.

(c) A transfer certificate will be issued by the service center director or the district director when he is satisfied that the tax imposed upon the estate, if any, has been fully discharged or provided for. The tax will be considered fully discharged for purposes of the issuance of a transfer certificate only when investigation has been completed and payment of the tax, including any deficiency finally determined, has been made. If the tax liability has not been fully discharged, transfer certificates may be issued permitting the transfer of particular items of property without liability upon the filing with the district director of such security as he may require. No transfer certificate is required in an estate of a resident decedent. Further, in the case of an estate of a nonresident decedent (regardless of citizenship) a transfer certificate is not required with respect to property which is being administered by an executor or administrator appointed, qualified, and acting within the United States. For additional regulations under section 6325, see § 301.6325-1 of this chapter (Regulations on Procedure and Administration).

[T.D. 6296, 23 FR 4529, June 24, 1958; 25 FR 14021, Dec. 31, 1960, as amended by T.D. 7296, 38 FR 34201, Dec. 12, 1973; T.D. 7302, 39 FR 796, Jan. 3, 1974]

§ 20.6601 Statutory provisions interest on underpayment, nonpayment, or extensions of time for payment, of

tax.

SEC. 6601. Interest on underpayment, nonpayment, or extensions of time for payment, of tax-(a) General rule. If any amount of tax imposed by this title (whether required to be shown on a return, or to be paid by stamp or by some other method) is not paid on or before the last date prescribed for payment, interest on such amount at an annual rate established under section 6621 shall be paid for the period from such last date to the date paid.

(b) Extensions of time for payment of estate tax. If the time for payment of an amount of tax imposed by chapter 11 18 extended as provided in section 6161 (a) (2) or 6166, or if the time for payment of an amount of such tax is postponed or extended as provided by section 6163, interest shall be paid at the rate of 4 percent, in lieu of 6 percent as provided in subsection (a).

[Sec. 6601 as amended by sec. 66(c), Technical Amendments Act 1958 (72 Stat. 1658); Bec. 206(e), Small Business Tax Revision Act

1958 (72 Stat. 1685); sec. 6601(a) amended by sec. 7(a)(2), Act of Jan. 3, 1975 (Pub. L. 93-625, 88 Stat. 2115)] [TD. 6296, 23 FR. 4529, June 24, 1958, as amended by T.D. 6522, 25 FR. 18891, Dec. 29, 1960; T.D. 7384, 40 FR 49323, Oct. 22, 1975] § 20.6601-1 Interest on underpayment, nonpayment, or extensions of time for payment, of tax.

For regulations concerning interest on underpayments, etc., see § 301.6601-1 of this chapter (Regulations on Procedure and Administration).

§ 20.6905 Statutory provisions; discharge of executor from personal liability for decedent's income and gift

taxes.

(a) Section 6905 as added by section 101 (e) of the Excise, Estate, and Gift Tax Adjustment Act of 1970:

SEC. 6905. Discharge of executor from personal liability for decedent's income and gift taxes-(a) Discharge of liability. In the case of liability of a decedent for taxes imposed by subtitle A or by chapter 12, if the executor makes written application (filled after the return with respect to such taxes is made and filed in such manner and such form as may be prescribed by regulations of the Secretary or his delegate) for release from personal liability for such taxes, the Secretary or his delegate may notify the executor of the amount of such taxes. The executor, upon payment of the amount of which he is notifled, or 1 year after receipt of the application if no notification is made by the Secretary or his delegate before such date, shall be discharged from personal liability for any deficiency in such tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.

(b) Definition of executor. For purposes of this section, the term "executor" means the executor or administrator of the decedent appointed, qualified, and acting within the United States.

(c) Cross reference. For discharge of executor from personal liability for taxes imposed under chapter 11, see section 2204.

[Sec. 6905 as added by sec. 101 (e), Excise, Estate, and Gift Tax Adjustment Act 1970 (84 Stat. 1837)]

(b) Section 101 (f) of the Excise, Estate, and Gift Tax Adjustment Act of 1970:

(1) Reduction of Period for Discharge of Executor from Personal Liability.-Effective with respect to the estates of decedents dying after December 31, 1973, sections 2204 and 6905 are each amended by striking out "1 year" and inserting in lieu thereof "9 months".

[Sec. 101 (f), Excise, Estate, and Gift Tax Adjustment Act 1970 (84 Stat. 1838)]

[T.D. 7238, 37 F.R. 28724, Dec. 29, 1972]

§ 20.6905-1

Discharge of executor from personal liability for decedent's income and gift taxes.

For regulations concerning the discharge of an executor from personal liability for a decedent's income and gift taxes, see § 301.6905-1 of this chapter (Regulations on Procedure and Administration).

[T.D. 7238, 37 F.R. 28725, Dec. 29, 1972] § 20.7101 Statutory provisions; form of bonds.

SEC. 7101. Form of bonds. Whenever, pursuant to the provisions of this title (other than sections 7485 and 6803(a)(1)), or rules or regulations prescribed under authority of this title, a person is required to furnish a bond or security

(1) General rule. Such bond or security shall be in such form and with such surety or sureties as may be prescribed by regulations issued by the Secretary or his delegate.

(2) United States bonds and notes in lieu of surety bonds. The person required to furnish such bond or security may, in lieu thereof, deposit bonds or notes of the United States as provided in 6 U.S.C. 15.

§ 20.7101-1 Form of bonds.

See paragraph (b) of § 20.6165-1 for provisions relating to the bond required in any case in which the payment of the tax attributable to a reversionary or remainder interest has been postponed under the provisions of § 20.6163-1. For further provisions relating to bonds, see § 20.6165-1 of these regulations and the regulations under section 7101 contained in Part 301 of this chapter (Regulations on Procedure and Administration). [T.D. 6600, 27 F.R. 4987, May 29, 1962] § 20.7404 Statutory provisions; authority to bring civil action for estate

taxes.

SEC. 7404. Authority to bring civil action for estate taxes. If the estate tax imposed by chapter 11 is not paid on or before the due date thereof, the Secretary or his delegate shall proceed to collect the tax under the provisions of general law; or appropriate proceedings in the name of the United States may be commenced in any court of the United States having jurisdiction to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. This section insofar as it applies to the collection of a deficiency shall be subject to the provisions of sections 6218 and 6601.

PART 24-TEMPORARY ESTATE TAX REG

ULATIONS UNDER SECTION 3 OF THE ACT OF OCTOBER 26, 1974 (PUBLIC LAW 93-483)

§ 24.1

Special rules applicable in the case of certain wills and trusts in existence on September 21, 1974.

(a) In general, in the case of a will executed before September 21, 1974, or a trust created (within the meaning of applicable local law) after July 31, 1969, and before September 21, 1974, if—

(1) At the time of the decedent's death a deduction is not allowable solely because of the failure of an interest in property which passes or has passed from the decedent to a person, or for a use, described in section 2055(a) to meet the requirements of section 2055 (e) (2) (A), and

(2) The governing instrument is amended or conformed in accordance with this paragraph so that the 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 the governing instrument is treated under paragraph (h) of this section as if it were amended, a deduction shall nevertheless be allowed.

(b) An amendment or conformation pursuant to this section must be made before January 1, 1976, or, if later, on or before the 30th day after the date on which judicial proceedings begun before January 1, 1976 (which are required to amend or conform the governing instrument) become final.

(c) A governing instrument may be amended or conformed under this section only where:

(1) The transfer is not in trust but passes under a will executed before September 21, 1974;

(2) The transfer is in the form of a testamentary trust created under a will executed before September 21, 1974;

(3) The transfer was in trust, which was created (within the meaning of applicable local law) after July 31, 1969, and before September 21, 1974, but only if, at the time of the creation of the trust, the governing instrument provides that an organization described in section 170 (c) receives an irrevocable remainder interest in such trust;

(4) Property was transferred inter vivos after July 31, 1969, and before October 18, 1971, to a trust created

(within the meaning of applicable local law) before August 1, 1969, which trust provides that an organization described in section 170 (c) receives an irrevocable remainder interest in such trust, and the transferred property and any undistributed income therefrom is severed and placed in a separate trust before the applicable date specified in paragraph (b) of this section. An instrument governing a transfer under this subparagraph (4), which is amended pursuant to this section shall be treated as having made such transfer to a trust deemed created on the date of such transfer;

(5) In the case of a transfer to a pooled income fund made before September 21, 1974 (or a transfer made under a will which was executed before September 21, 1974), the instrument governing the transfer fails to satisfy the requirements of § 1.642 (c)-5(b).

However, a governing instrument may not be amended pursuant to this section unless, at the time of the decedent's death, the interest is an irrevocable remainder interest for which a deduction, but for section 2055 (e) (2) (A), would be allowable under section 2055 (a) and the regulations thereunder. The provisions of section 508 (d) (2) (A) (relating to disallowance of certain charitable, etc., deductions) shall not apply to such interest if the governing instrument is amended so as to comply with the requirements of section 508(e) (relating to governing instruments) by the applicable date described in paragraph (b) of this section.

(d) The decree resulting from any judicial proceedings begun to amend a governing instrument pursuant to paragraph (a) of this section must be binding, under local law, on all parties having an interest in the bequest or transfer as well as the fiduciary of the decedent's estate and trustee of the trust to be amended. In the event local law does not require judicial proceedings to amend or conform a governing instrument, a deduction may nevertheless be allowed if the governing instrument is amended or conformed by nonjudicial agreement between all parties having an interest in the bequest or transfer as well as the fiduciary of the decedent's estate and trustee of the trust to be amended provided that the agreement is binding, under local law, on all such parties. The judicial proceedings or nonjudicial agreement must also account for any distri