in section 2055 or 2106 (a) (2), the allowance of the credit under this section shall be subject to the following conditions and limitations:

(1) The taxes described in subsection (a) shall not include any estate, succession, legacy, or inheritance tax for which a deduction is allowed under section 2053 (d).

(2) The credit shall not exceed the lesser of

(A) The amount stated in subsection (b) on a taxable estate determined by allowing the deduction authorized by section 2053 (d),

or

(B) That proportion of the amount stated in subsection (b) on a taxable estate determined without regard to the deduction authorized by section 2053 (d) as (i) the amount of the taxes described in subsection (a), as limited by the provisions of paragraph (1) of this subsection, bears to (ii) the amount of the taxes described in subsection (a) before applying the limitation contained in paragraph (1) of this subsection.

(3) If the amount determined under subparagraph (B) of paragraph (2) is less than the amount determined under subparagraph (A) of that paragraph, then for purposes of subsection (d) such lesser amount shall be the maximum credit provided by subsection (b).

[Sec. 2011 as amended by sec. 3, Act of Feb. 20, 1956 (Pub. Law 414, 84th Cong., 70 Stat. 24)]

§ 20.2011-1 Credit for State death taxes-(a) In general. A credit is allowed under section 2011 against the Federal estate tax for estate, inheritance, legacy or succession taxes actually paid to any State, Territory, or possession of the United States, or the District of Columbia (referred to in this section as "State death taxes"). The credit, however, is allowed only for State death taxes paid (1) with respect to property included in the decedent's gross estate, and (2) with respect to the decedent's estate. The amount of the credit is subject to the limitation described in paragraph (b) of this section. It is subject to further limitations described in § 20.2011-2 if a deduction is allowed under section 2053 (d) for State death taxes paid with respect to a charitable gift.

(b) Amount of credit. (1) If the decedent's taxable estate does not exceed $40,000, the credit for State death taxes is zero.

If the decedent's taxable estate does not exceed $40,000, the credit for State death taxes is limited to an amount computed in accordance with the following table:

(2) Subparagraph (1) of this graph may be illustrated by the fo ing example:

Example. (1) The decedent died Janu 1955, leaving a taxable estate of $150,00 January 1, 1956, inheritance taxes to $2,500 were actually paid to a State respect to property included in the dent's gross estate. Reference to the discloses that the specified amount i umn (A) nearest to but less than the of the decedent's taxable estate is $14 The maximum credit in respect of amount, as indicated in column (C $1,200. The amount by which the ta estate exceeds the same specified amo $10,000. The maximum credit in respe this amount, computed at the rate percent indicated in column (D), is Thus, the maximum credit in respect o decedent's taxable estate of $150,000 is $ even though $2,500 in inheritance taxe actually paid to the State.

(ii) If, in subdivision (i) of this exa the amount actually paid to the State $950, the credit for State death taxes w be limited to $950. If, in subdivision ( this example, the decedent's taxable e was $35,000, no credit for State death would be allowed.

(c) Miscellaneous limitations and ditions to credit-(1) Period of lim tions. The credit for State death t is limited under section 2011 (c) to t taxes which were actually paid and which a credit was claimed within years after the filing of the estate return for the decedent's estate. however, a petition has been filed

The Tax Court of the United States for the redetermination of a deficiency within the time prescribed in section 6213 (a), the credit is limited to those taxes hich were actually paid and for which credit was claimed within four years after the filing of the return or within 0days after the decision of The Tax Court becomes final, whichever period is the last to expire. Similarly, if an extension of time has been granted under section 6161 for payment of the tax shown on the return, or of a deficiency, the credit is limited to those taxes which were actually paid and for which a credit was claimed within four years after the fling of the return, or before the date of expiration of the period of the extension, hichever period is last to expire. See ection 2015 for the applicable period of mitations for credit for State death axes on reversionary or remainder inerests if an election is made under secon 6163 (a) to postpone payment of he estate tax attributable to reversionry or remainder interests. If a claim or refund based on the credit for State eath taxes is filed within the applicable eriod described in this subparagraph, a efund may be made despite the general mitation provisions of sections 6511 and 512. Any refund based on the credit escribed in this section shall be made thout interest.

(2) Submission of evidence.

Before

he credit for State death taxes is alwed, evidence that such taxes have been aid must be submitted to the district rector. The district director may reure the submission of a certificate from e proper officer of the taxing State, erritory, or possession of the United tates, or the District of Columbia, showg: (i) The total amount of tax imposed efore adding interest and penalties and efore allowing discount); (ii) the mount of any discount allowed; (iii) e amount of any penalties and interest posed or charged; (iv) the total mount actually paid in cash; and (v) e date or dates of payment. If the mount of these taxes has been redeterned, the amount finally determined could be stated. The required evidence culd be filed with the return, but if at is not convenient or possible, then should be submitted as soon thereafter practicable. The district director may quire the submission of such addi

tional proof as is deemed necessary to establish the right to the credit. For example, he may require the submission of a certificate of the proper officer of the taxing jurisdiction showing (vi) whether a claim for refund of any part of the State death tax is pending and (vii) whether a refund of any part thereof has been authorized, and if a refund has been made, its date and amount, and a description of the property or interest in respect of which the refund was made. The district director may also require an itemized list of the property in respect of which State death taxes were imposed certified by the officer having custody of the records pertaining to those taxes. In addition, he may require the executor to submit a written statement (containing a declaration that it is made under penalties of perjury) stating whether, to his knowledge, any person has instituted litigation or taken an appeal (or contemplates doing so), the final determination of which may affect the amount of those taxes. See section 2016 concerning the redetermination of the estate tax if State death taxes claimed as credit are refunded.

(d) Definition of "basic estate tax". Section 2011 (d) provides definitions of the terms "basic estate tax" and "additional estate tax", used in the Internal Revenue Code of 1939, and "estate tax imposed by the Revenue Act of 1926", for the purpose of supplying a means of computing State death taxes under local statutes using those terms, and for use in determining the exemption provided for in section 2201 for estates of certain members of the Armed Forces. See section 2011 (e) (3) for a modification of these definitions if a deduction is allowed under section 2053 (d) for State death taxes paid with respect to a charitable gift.

§ 20.2011-2 Limitation on credit if a deduction is allowed under section 2053 (d). If a deduction is allowed under section 2053 (d) for State death taxes paid with respect to a charitable gift, the credit for State death taxes is subject to special limitations. Under these limitations, the credit cannot exceed the least of the following:

(a) The amount of State death taxes paid other than those for which a deduction is allowed under section 2053 (d);

(b) The amount indicated in section 2011 (b) to be the maximum credit allowable with respect to the decedent's taxable estate; or

(c) An amount, A, which bears the same ratio to B (the amount which would be the maximum credit allowable under section 2011 (b) if the deduction under section 2053 (d) were not allowed in computing the decedent's taxable estate) as C (the amount of State death taxes paid other than those for which a deduction is allowed under section 2053 (d)) bears to D (the total amount of State death taxes paid). For the purpose of this computation, in determining what the decedent's taxable estate would be if the deduction under section 2053 (d) were not allowed, adjustment must be made for the decrease in the deduction for charitable gifts under section 2055

or 2106 (a) (2) (for estates of nonre dents not citizens) by reason of any crease in Federal estate tax which wo be charged against the charitable gif The application of this section may illustrated by the following example:

Example. The decedent died January 1955, leaving a gross estate of $925,0 Expenses, indebtedness, etc., amounted $25,000. The decedent bequeathed $400, to his son with the direction that the s bear the State death taxes on the beque The residuary estate was left to a charita organization. Except as noted above, Federal and State death taxes were paya out of the residuary estate. The State i posed death taxes of $60,000 on the so bequest and death taxes of $75,000 on bequest to charity. The decedent's taxa estate (determined without regard to limitation imposed by section 2011 (e) (B)) is computed as follows:

Taxable estate_.

462,916.

Taxable estate_

570,000.

$135,000

×$15,200)----

$60,000.

10,916.

6,755.

6, 755.

§ 20.2012 Statutory provisions; credit for gift tax.

SEC. 2012. Credit for gift tax-(a) In general. If a tax on a gift has been paid under chapter 12 (sec. 2501 and following), or under corresponding provisions of prior laws, and thereafter on the death of the donor any amount in respect of such gift is required to be included in the value of the gross estate of the decedent for purposes of this chapter, then there shall be credited against the tax imposed by section 2001 the amount of the tax paid on a gift under chapter 12, or under corresponding provisions of prior Laws, with respect to so much of the property which constituted the gift as is included in the gross estate, except that the amount of such credit shall not exceed an amount which bears the same ratio to the tax imposed by section 2001 (after deducting from such tax the credit for State death taxes provided by section 2011) as the value (at the time of the gift or at the time of the death, whichever is lower) of so much of the property which constituted the gift as is induded in the gross estate bears to the value

the entire gross estate reduced by the aggregate amount of the charitable and marital deductions allowed under sections 2055, 2056, and 2106 (a) (2).

(b) In applying, with respect to any gift, the ratio stated in subsection (a), the value at the time of the gift or at the time of the death, referred to in such ratio, shall be reduced

(1) By such amount as will properly reflect the amount of such gift which was excluded in determining (for purposes of section 2503 (a)), or of corresponding provisions of prior laws, the total amount of gifts made during the year in which the gift was made;

(2) If a deduction with respect to such gift is allowed under section 2056 (a) (relating to marital deduction)-then by an amount which bears the same ratio to such value (reduced as provided in paragraph (1) cf this subsection) as the aggregate amount of the marital deductions allowed under section 2056 (a) bears to the aggregate amount such marital deductions computed without regard to subsection (c) thereof; and

(3) If a deduction with respect to such it is allowed under sections 2055 or 2106 a (2) (relating to charitable deduction) – then by the amount of such value, reduced as provided in paragraph (1) of this subsection.

(c) Where the decedent was the donor of the gift but, under the provisions of section 2513, or corresponding provisions of prior aws, the gift was considered as made onehalf by his spouse—

(1) The term "the amount of the tax paid a gift under chapter 12", as used in subsection (a), includes the amounts paid with respect to each half of such gift, the amount paid with respect to each being computed in the manner provided in subsection (d); And

(2) In applying, with respect to such gift, the ratio stated in subsection (a), the value at the time of the gift or at the time of the death, referred to in such ratio, includes such value with respect to each half of such gift, each such value being reduced as provided in paragraph (1) of subsection (b).

(d) (1) For purposes of subsection (a), the amount of tax paid on a gift under chapter 12, or under corresponding provisions of prior laws, with respect to any gift shall be an amount which bears the same ratio to the total tax paid for the year in which the gift was made as the amount of such gift bears to the total amount of taxable gifts (computed without deduction of the specific exemption) for such year.

(2) For purposes of paragraph (1), the "amount of such gift" shall be the amount included with respect to such gift in determining (for the purposes of section 2503 (a), or of corresponding provisions of prior laws) the total amount of gifts made during such year, reduced by the amount of any deduction allowed with respect to such gift under section 2522, or under corresponding provisions of prior laws (relating to charitable deduction), or under section 2523 (relating to marital deduction).

§ 20.2012-1 Credit for gift tax-(a) In general. A credit is allowed under section 2012 against the Federal estate tax for gift tax paid under chapter 12 of the Internal Revenue Code, or corresponding provisions of prior law, on a gift by the decedent of property subsequently included in the decedent's gross estate. The credit is allowable even though the gift tax is paid after the decedent's death and the amount of the gift tax is deductible from the gross estate as a debt of the decedent.

(b) Limitations on credit. The credit for gift tax is limited to the smaller of the following amounts:

(1) The amount of gift tax paid on the gift, computed as set forth in paragraph (c) of this section, or

(2) The amount of the estate tax attributable to the inclusion of the gift in the gross estate, computed as set forth in paragraph (d) of this section.

When more than one gift is included in the gross estate, a separate computation of the two limitations on the credit is to be made for each gift.

(c) "First limitation". The amount of the gift tax paid on the gift is the "first limitation". Thus, if only one gift was made during a certain calendar year, and the gift is wholly included in the decedent's gross estate for the purpose of the estate tax, the credit with respect to