CHAPTER I NATURE OF TAX Revenue Act of 1924. SEC. 301. (a) In lieu of the tax imposed by Title IV of the Revenue Act of 1921, a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 303) is hereby imposed upon the transfer of the net estate of every decedent dying after the enactment of this Act, whether a resident or nonresident of the United States: 1 per cent of the amount of the net estate not in excess of $50,000; 2 per cent of the amount by which the net estate exceeds $50,000 and does not exceed $100,000; 3 per cent of the amount by which the net estate exceeds $100,000 and does not exceed $150,000; 4 per cent of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 6 per cent of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 9 per cent of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 12 per cent of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 15 per cent of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000; 18 per cent of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 21 per cent of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000; 24 per cent of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 27 per cent of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 30 per cent of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 35 per cent of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; 40 per cent of the amount by which the net estate exceeds $10,000,000. Regulations 68. ART. 1. The various statutes.-The Federal estate tax was first imposed by the Act of September 8, 1916. This law was amended by the Act of March 3, 1917 (Title III), by increasing the rate of tax. The Act of October 3, 1917 (Title IX), imposed a tax upon the transfer of the net estate of decedents dying after October 3, 1917, in addition to the tax imposed by the Revenue Act of 1916, as amended. The Revenue Act of 1918 (Title IV), which became effective 6:55 p. m., Washington, D. C., time, February 24, 1919, reduced the rates applicable to net estates below $1,500,000, as compared with those of Title IX of the Revenue Act of 1917, and contained a number of provisions not found in any of the prior acts. The Revenue Act of 1921 (Title IV) became effective at 3:55 p. m., Washington, D. C., time, November 23, 1921. It reënacts without change the rates of Title IV of the Revenue Act of 1918, supplants all prior acts as to the estate of decedents dying after the effective date thereof, embodies numerous changes, but continues many of the provisions of the earlier acts. The Revenue Act of 1924 (Part I, Title III), which became effective at 4:01 p. m., Washington, D. C., time, June 2, 1924, increased the rates applicable to net estates in excess of $100,000, as compared with those of Title IV of the Revenue Act of 1921; contains provisions not found in any of the prior acts, but does not include all the exemptions accorded by the Revenue Act of 1921. It is herein referred to as "the statute." References to other statutes are specific. The statute sub ART. 2. Transfers and interests reached. jects to tax transfers by will and under intestate laws; transfers made by the decedent in his lifetime, when made in contemplation of or intended to take effect in possession or enjoyment at or after his death, excepting, however, bona fide sales for a fair consideration in money or money's worth; transfers, other than those made bona fide for a fair consideration in money or money's worth, by the decedent in his lifetime where the enjoyment was subject at his death to any change through the exercise of a power, either by him alone or in conjunction with any person, to alter, amend, or revoke, or where any such power was relinquished by the decedent in contemplation of his death. There is also subjected to tax the dower, curtesy, or statutory estate in lieu thereof, of the surviving spouse; property held by the decedent and another person or persons where the survivor or survivors take by right of survivorship; insurance receivable by the executor under policies taken out by the decedent upon his life, and insurance so taken out and receivable by all other beneficiaries to the extent that the aggregate amount thereof exceeds $40,000. ART. 3. Neither a property nor an inheritance tax.-The Federal estate tax is imposed upon the transfer of the net estate of every person dying after September 8, 1916, determined in . the manner prescribed by the applicable law. (See Art. 1.) The tax is not laid upon the property but upon the transfer of the entire net estate and not any particular legacy, devise, or distributive share. The relationship of the beneficiary to the decedent has no bearing upon the question of liability or the extent thereof. The transfer of property is taxable although it escheats to the state for lack of heirs. ART. 4. Description of taxable estates.-The tax is imposed upon the transfer of the 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 of the authorized deductions. One of the deductions authorized in the estate of a resident decedent is the specific sum of $50,000. No such deduction is authorized in the estate of a nonresident decedent. There is no basis for tax where the value of the gross estate does not exceed the total amount of the authorized deductions, although the filing of a return is required if the decedent was a resident and the value of his gross estate at the date of his death exceeded $50,000, or, if a nonresident, any part of his gross estate was situated in the United States. As to the situs of property in estates of nonresidents, see Art. 50.. ART. 5. Definition of "resident" and "nonresident."-The statute provides (paragraph (5) of section 2 (a)) that 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. 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 time of death and with respect to whose prop erty any probate or administration proceedings are had in the United States Court for China. (See Sec. 318 (a).) 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 permanently to remain in such service. (See Sec. 303 (f).) All persons not residents of the United States as above defined, or to whom the presumption just stated does not apply, are nonresidents. Except as stated above, the statute takes no account of the citizenship of the decedent, but contains different provisions controlling the determination of the tax liability of the estates of residents and nonresidents. A citizen of the United States is a nonresident if his domicile is in Porto Rico, the Philippine Islands, or other foreign country, whereas a subject or a citizen of a foreign country is a resident if his domicile is in the United States. 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. ART. 6. Manner of determining liability.-The first step in the determination of tax liability is to ascertain the total value of the decedent's gross estate. (See Arts. 10 to 28, inclusive; also Art. 50.) The second step is to subtract from the value of the gross estate the total amount of the deductions authorized in order to arrive at the value of the net estate. (See Arts. 29 to 48, inclusive, as to estates of residents; and Arts. 51 to 55, inclusive, as to estates of nonresidents.) The third step is to obtain the sum of the percentages of successive portions of the net estate, as provided by the applicable taxing act. (See Arts. 7 and 8.) ART. 7. Rates of tax.-The Revenue Act of 1916, the amendment thereto of March 3, 1917, the Revenue Act of 1917, and the Revenue Act of 1918, each imposed different rates of tax. The rates imposed by the Revenue Act of 1921 are the same |