Estates of Decedents Dying During 1944 to 1949, Inclusive CHAPTER 3-ESTATE TAX SUBCHAPTER A-BASIC ESTATE TAX PART I-INTRODUCTORY PROVISIONS Sec. 800. Application of subchapter. The provisions of this subchapter shall apply only to estates of decedents dying after the date of the enactment of this title. Estate taxes in the case of decedents dying on or prior to the date of the enactment of this title shall not be affected by the provisions of this subchapter, but shall remain subject to the applicable provisions of the Revenue Act of 1926 and prior revenue acts, except as such provisions are modified by legislation enacted subsequent to the Revenue Act of 1926. Sec. 801. Classification of provisions. The provisions of this subchapter are herein classified and designated as Part I-Introductory provisions. Part II-Citizens or residents of the United States. Part III-Nonresidents not citizens of the United States. Part IV-Supplemental provisions. Sec. 802. Application of parts. Part II shall apply to the estates of citizens or residents of the United States and, except as otherwise provided, to the estates of nonresidents not citizens of the United States, subject to the exceptions and additional provisions contained in Part III. Part IV shall apply to the estates both of citizens or residents of the United States and nonresidents not citizens of the United States. PART II-ESTATES OF CITIZENS OR RESIDENTS OF THE UNITED STATES Subpart I-Computation of Tax Sec. 810. Rate of tax. A tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 812) shall be imposed upon the transfer of the net estate of every decedent, citizen or resident of the United States, dying after the date of the enactment of this title. 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $100,000; 3 per centum of the amount by which the net estate exceeds $100,000 and does not exceed $200,000; 4 per centum of the amount by which the net estate exceeds $200,000 and does not exceed $400,000; 5 per centum of the amount by which the net estate exceeds $400,000 and does not exceed $600,000; 6 per centum of the amount by which the net estate exceeds $600,000 and does not exceed $800,000; 7 per centum of the amount by which the net estate exceeds $800,000 and does not exceed $1,000,000; 8 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000; 9 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 10 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $2,500,000; 11 per centum of the amount by which the net estate exceeds $2,500,000 and does not exceed $3,000,000; 12 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $3,500,000; 13 per centum of the amount by which the net estate exceeds $3,500,000 and does not exceed $4,000,000; 14 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 15 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $6,000,000; 16 per centum of the amount by which the net estate exceeds $6,000,000 and does not exceed $7,000,000; 17 per centum of the amount by which the net estate exceeds $7,000,000 and does not exceed $8,000,000; 18 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $9,000,000; 19 per centum of the amount by which the net estate exceeds $9,000,000 and does not exceed $10,000,000; 20 per centum of the amount by which the net estate exceeds $10,000,000. Sec. 810, I. R. C., supra, originated 1916 as Sec. For any amendments prior to 1944, see- Sec. 811. Gross estate. The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, except real property situated outside of the United States Sec. 811, I. R. C., supra, originated 1916 as Sec. 202, R. A. of 1916. For any amendments prior to 1944, see Eighth Edition, p. 482, Ninth Edition, p. 956. Sec. 811. (a) Decedents interest.-To the extent of the interest therein of the decedent at the time of his death; Sec. 811 (a), I. R. C., supra, originated 1916 as For any amendments prior to 1944, see Eighth Edition, p. 482, Estates of Decedents Dying During 1944 to 1949, Inclusive Sec. 811. (b) Dower or curtesy interests.-To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy ; Sec. 811 (b), I. R. C.. supra, originated 1918 as For any amendments prior to 1944, see Eighth Edition, p. 484, Ninth Edition, p. 956. Seer 811, (e) Transfers in contemplation of, taking effect at death. To the extent of tany inter eet therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death, or of which he has at any time made a transfer, by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact ond before his death (1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in conjunction with-any person, to designate the persons who shall possess or enjoy the property or the income therefrom, except in ease of a bona fide sale for an adequate and full consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this subchapters Sec. 811. (c) Transfers in contemplation of, or taking effect at, death.— Sec. 811. (c) (1) General rule.-To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise (A) in contemplation of his death. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this subchapter; or (B) under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death (i) the possession or enjoyment of, or the right to the income from, the property, or (ii) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom; ΟΤ (C) intended to take effect in possession or enjoyment at or after his death. Sec. 811. (c) (2) Transfers taking effect at death.-Transfers prior to October 8, 1949.-An interest in property of which the decedent made a transfer, on or before October 7, 1949, intended to take effect in possession or enjoyment at or after his death shall not be included in his gross estate under paragraph (1) (C) of this subsection unless the decedent has retained a reversionary interest in the property, arising by the express terms of the instrument of transfer and not by operation of law, and the value of such reversionary interest immediately before the death of the decedent exceeds 5 per centum of the value of such property. For the purposes of this paragraph, the term "reversionary interest" includes a possibility that property transferred by the decedent (A) may return to him or his estate, or (B) may be subject to a power of disposition by him, but such term does not include a possibility that the income alone from such property may return to him or become subject to a power of disposition by him. The value of a reversionary interest immediately before the death of the decedent shall be determined (without regard to the fact of the decedent's death) by usual methods of valuation, including the use of tables of mortality and actuarial principles, pursuant to regulations prescribed by the Commissioner with the approval of the Secretary. In determining the value of a possibility that property may be subject to a power of disposition by the decedent, such possibility shall be valued as if it were a possibility that such property may return to the decedent or his estate. Sec. 811. (c) (3) Transfers taking effect at death-Transfers after October 7, 1949.-An interest in property transferred by the decedent after October 7, 1949, shall be included in his gross estate under paragraph (1) (C) of this subsection (whether or not the decedent retained any right or interest in the property transferred) if and only if— (A) possession or enjoyment of the property can, through ownership of such interest, be obtained only by surviving the decedent; or (B) under alternative contingencies provided by the terms of the transfer, possession or enjoyment of the property can, through ownership of such interest, be obtained only by surviving the earlier to occur of (i) the decedent's death or (ii) some other event; and such other event did not in fact occur during the decedent's life. Notwithstanding the foregoing sentence, an interest so transferred shall not be included in the decedent's gross estate under paragraph (1) (C) of this subsection if possession or enjoyment of the property could have been obtained by any beneficiary during the decedent's life through the exercise of a power of appointment (as defined in section 811 (f) (2) which in fact was exercisable immediately prior to the decedent's death. Sec. 811 (c), I. R. C., supra, originated 1916 as For any amendments prior to 1944, see Eighth Edition, p. 484, Ninth Edition, p. 956. Sec. 811 (c), I. R. C., supra, which is shown in stricken through type, amended by Sec. 7 (a), Act of Oct. 25, 1949, to read as shown in italics. Estates of Decedents Dying During 1944 to 1949, Inclusive Retroactivity Sec. 7 (b) of said Act makes amendment applicable to estates of decedents dying after Feb. 10, 1939, except as otherwise provided therein for which see fn. 18. See Sec. 6 (c), Act of Oct. 25, 1949, in fn. 19, for effect of relinquishment of power on or before Dec. 31, 1950, on contemplation of death. Also see fn. 20 for Sec. 8, Act of Oct. 25, 1949, re tax free release of certain life estates. Sec. 811. (d) Revocable Transfers. Sec. 811. (d) (1) Transfers after June 22, 1936. -To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona-fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power (in whatever capacity exercisable) by the decedent alone or by the decedent in conjunction with any other person (without regard to when or from what source the decedent acquired such power), to alter, amend, revoke, or terminate, or where any such power is relinquished in contemplation of decedent's death; Sec. 811 (d), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see Eighth Edition, p. 486, Sec. 811. (d) (2) Transfers on or prior to June 22, 1936.-To the extent of any interest therein of which the decedent has at any time made a transfer, 18 Sec. 7 (b) and (c), Act of Oct. 25, 1949, read as follows: "Sec. 7 (b). The amendment made by subsection (a) shall be applicable with respect to estates of decedents dying after February 10, 1939. The provisions of section 811 (c) of the Internal Revenue Code, as amended by subsection (a), shall (except as otherwise specifically provided in such section or in the following sentence) apply to transfers made on, before, or after February 26, 1926. The provisions of section 811 (c) (1) (B) of such code shall not, in the case of a decedent dying prior to January 1, 1950, apply to— (1) a transfer made prior to March 4, 1931; or (2) a transfer made after March 3, 1931, and prior to June 7, 1932, unless the property transferred would have been includible in the decedent's gross estate by reason of the amendatory language of the joint resolution of March 3, 1931 (46 Stat. 1516). No interest shall be allowed or paid on any overpayment resulting from the application of subsection (a) with respect to any payment made prior to the date of the enactment of this Act. (c) If refund or credit of any overpayment resulting from the application of subsections (a) and (b) is prevented on the date of the enactment of this Act, or within one year from such date, by the operation of any law or rule of law (other than section 3760 of the Internal Revenue Code, relating to closing agreements, and other than section 3761 of such code, relating to compromises), refund or credit of such overpayment may, nevertheless, be made or allowed if claim therefor is filed within one year from the date of the enactment of this Act. This subsection shall not apply with respect to a transfer of property in case the decedent retained for his life or for any period not ascertainable without reference to his death or for any period which did not in fact end before his death (1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power in contemplation of his death, except in case of a bona fide sale for an adequate and full consideration in money or money's worth. Except in the case of transfers made after June 22, 1936, no interest of the decedent of which he has made a transfer shall be included in the gross estate under paragraph (1) unless it is includible under this paragraph; Sec. 811 (d) (2), I. R. C., supra, originated 1939 For any amendments prior to 1944, see- Sec. 811. (d) (3) Date of existence of power. For the purposes of this subsection the power to alter, amend, or revoke shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject to a precedent giving of notice or even though the alteration, amendment, or revocation takes effect only on the expiration of a stated period after the exercise of the power, whether or not on or before the date of the decedent's death notice has been given or the power has been exercised. In such cases proper adjustment shall be made representing the interest which would have been excluded from the power if the decedent had lived, and for such purpose if the notice has not been given or the power has not been exercised on or before the date of his death, such notice shall be considered to conjunction with any person, to designate the persons who 20 Sec. 8, Act of Oct. 25, 1949, reads as follows: In the case of a transfer of property made prior to June 7, 1932, under which the grantor retained (1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom, then an assignment by the grantor of such possession, enjoyment, or right to income, or a relinquishment by him of such right of designation, shall, if made in 1949 or 1950, not be deemed a transfer of property for the purposes of chapter 4 of the Internal Revenue Code, and shall, if made prior to 1951, not be deemed to have been made in contemplation of death within the meaning of chapter 3 of such code. The foregoing provisions shall not apply(A) if the transfer was made after March 3, 1931, and prior to June 7, 1932, and if the property transferred would have been includible in the grantor's gross estate upon his death by reason of the amendatory language of the joint resolution of March 3, 1931 (45 Stat. 1516); or (B) if the property transferred would have been includible in the grantor's gross estate under section 811 (d) of the Internal Revenue Code had he died on October 7, 1949." Estates of Decedents Dying During 1944 to 1949, Inclusive have been given, or the power exercised, on the date of his death. Sec. 811 (d) (3), I. R. C., supra, originated 1934 For any amendments prior to 1944, see- Ninth Edition, p. 958. Sec. 811. (d) (4) Relinquishment of power in contemplation of death.-The relinquishment of any such power, not admitted or shown to have been in contemplation of the decedent's death, made within two years prior to his death without such a consideration and affecting the interest or interests (whether arising from one or more transfers or the creation of one or more trusts) of any one beneficiary of a value or aggregate value, at the time of such death, in excess of $5,000, then, to the extent of such excess, such relinquishment or relinquishments shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this subchapter. Sec. 811 (d) (4), I. R. C., supra, originated 1926 as Sec. 302 (d) (3), R. A. of 1926. For any amendments prior to 1944, see Eighth Edition, p. 488, Ninth Edition, p. 960. See. 811. (d) (5) Transfers of community-pro erty in contemplation of death, ete. For the purposes of this subsection and subsection (e), a trane fer of property held as community property by the decedent and surviving spouse under the law of any State, Territory, or possession of the United States, or any foreign country, shall be considered to have been made by the decedent, except such part thereef ae may be shown to have been received as compense tion for personal services actually rendered by the surviving spouse or derived originally from such compensation or from separate property of the e viving spouse, Repeal of Sec. 811 (d) (5), Supra Sec. 811 (d) (5), I. R. C., supra, repealed by Sec. 351 (a), R. A. of 1948, effective with respect to estates of decedents dying after Dec. 31, 1947. See footnote 21 for limitation upon effect of repeal as to total taxes payable. Sec. 811 (d) (5), supra, originated 1942 as Sec. For any amendments prior to 1944, see- Sec. 811. (e) Joint and community interests.— Sec. 811. (e) (1) Joint-interests. To the extent of the interest therein held as joint tenants by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to 21 Sec. 351 (c), R. A. of 1948, reads as follows: "(c) Notwithstanding the repeal of sections 811 (d) (5), 811 (e) (2), and 811 (g) (4) provided in subsection (a), the taxes imposed under chapter 3 of the Internal Revenue Code upon the transfer of the net estate of any decedent dying have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money's worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than an adequate and full consideration in money or money's worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further, That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy by the entirety by the decedent and spouse, then to the extent of one-half of the value thereof, or, where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of the value of a fractional part to be determined by dividing the value of the property by the number of joint tenants. The words "and community" stricken out of heading of Sec. 811 (e) I. R. C., supra, and words "Joint interests" stricken out of heading of Sec. 811 (e) (1), I. R. C., supra, by Sec. 351 (b), R. A. of 1948. Sec. 811 (e), I. R. C., supra, originated 1916 as Sec. For any amendments prior to 1944, see- Edition, p. 962. Beer 811, (e) (2) Community interests. To the extent of the interest therein held as community property by the decedent and surviving spouse under the law of any State, Territory, or possession of the United States, or any foreign country, except such part thereof as may be shown to have been received as compensation for personal services actually rendered by the surviving spouse or derived originally from such compensation or from separate property of the surviving spouse. In no case shall such interest included in the gross estate of the decedent be less than the value of such part of the community property as was subject to the decedent's power of testamentary disposition, Repeal of Sec. 811 (e) (2) Sec. 811 (e) (2), I. R. C., supra, repealed by Sec. 351 (a), R. A. of 1948, effective with respect to estates of decedents dying after Dec. 31, 1947. See footnote 21 for limitation upon effect of re- Sec. 811 (e) (2), I. R. C., supra, originated 1942 as For any amendments prior to 1944, see- Sec. 811. (f) Powers of appointment.— Sec. 811. (f) (1) In general.-To the extent of any property (A) with respect to which the decedent has after December 31, 1947, and on or before the date of the enactment of this Act shall not exceed the taxes which would have been imposed under such chapter 3 upon such transfer if this section had not been enacted." Estates of Decedents Dying During 1944 to 1949, Inclusive at the time of his death a power of appointment, or (B) with respect to which he has at any time exercised or released a power of appointment in contemplation of death, or (C) with respect to which he has at any time exercised or released a power of appointment by a disposition intended to take effect in possession or enjoyment at or after his death, or by a disposition under which he has retained for his life or any period not ascertainable without reference to his death or for any period which does not in fact end before his death (i) the possession or enjoyment of, or the right to the income from, the property, or (ii) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom; except in case of a bona fide sale for an adequate and full consideration in money or money's worth. Sec. 811 (f), I. R. C., supra, originated 1918 as For any amendments prior to 1944, see Eighth Edition, p. 490, Ninth Edition, p. 964. Sec. 811. (f) (2) Definition of power of appointment.-For the purposes of this subsection the term "power of appointment" means any power to appoint exercisable by the decedent either alone or in conjunction with any person, except (A) a power to appoint within a class which does not include any others than the spouse of the decedent, spouse of the creator of the power, descendants of the decedent or his spouse, descendants (other than the decedent) of the creator of the power or his spouse, spouses of such descendants, donees described in section 812 (d), and donees described in section 861 (a) (3). As used in this subparagraph, the term "descendant" includes adopted and illegitimate descendants, and the term "spouse" includes former spouse; and (B) a power to appoint within a restricted class if the decedent did not receive any beneficial interest, vested or contingent, in the property from the creator of the power or thereafter acquire any such interest, and if the power is not exercisable to any 21a Sec. 403 (d), R. A. of 1942 (referring to amendments made by Sec. 403 (a), (b), and (c), R. A. of 1942, to Secs. 811 (f), 812 (d), 861 (a) (3) and 826 (d), I. R. C.) provides as follows: Sec. 403. (d) Powers with respect to which amendments not applicable. (1) The amendments made by this section shall not apply with respect to a power to appoint, created on or before the date of the enactment of this Act, which is other than a power exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate, unless such power is exercised after the date of the enactment of this Act. (2) The amendments made by this section shall not become applicable with respect to a power to appoint created on or before the date of enactment of this Act, which is exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate, if at such date the donee of such power is under a legal disability to release such power, until six months after the termination of such legal disability. For the purposes of the preceding sentence, an individual in the military or naval forces of the United States shall, until the termina extent for the benefit of the decedent, his estate, his creditors, or the creditors of his estate. If a power to appoint is exercised by creating another power to appoint, such first power shall not be considered excepted under subparagraph (A) or (B) from the definition of power of appointment to the extent of the value of the property subject to such second power to appoint. For the purposes of the preceding sentence the value of the property subject to such second power to appoint shall be its value unreduced by any precedent or subsequent interest not subject to such power to appoint. Sec. 811 (f) (2), I. R. C., supra, originated 1942 For any amendments prior to 1944, see- Sec. 811. (f) (3) Date of existence of power.— For the purposes of this subsection the power of appointment shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of a stated period after its exercise, whether or not on or before the date of the decedent's death notice has been given or the power has been exercised. See fn. 21a regarding extension of time for release of power of appointment. Sec. 811 (f) (3), I. R. C., supra, originated 1942 For any amendments prior to 1944, see- Sec. 811. (g) Proceeds of life insurance.— Sec. 811. (g) (1) Receivable by the executor.To the extent of the amount receivable by the executor as insurance under policies upon the life of the decedent. Sec. 811. (g) (2) Receivable by other beneficiaries.-To the extent of the amount receivable by all other beneficiaries as insurance under policies upon the life of the decedent (A) purchased with tion of the present war, be considered under a legal disability to release a power to appoint. (3) The amendments made by this section shall not apply with respect to any power to appoint created on or before the date of the enactment of this Act if it is released before January 1, 1943, or within the time limited by paragraph (2) in cases to which such paragraph is applicable; or if the decedent dies before January 1, 1943, or within the time limited by paragraph (2) in cases to which such paragraph is applicable, and such power is not exercised. Sec. 403 (d) (3), R. A. of 1942, supra, has been amended extending time of release of power of appointment as follows: P. L. 809, 77th Cong., to July 1, 1943. Sec. 10, Cur. Tax Pay. Act, to March 1, 1944. Sec. 505, R. A. of 1943, to Jan. 1, 1945. P. L. 511, 78th Cong., to July 1, 1945. P. L. 95, 79th Cong., to July 1, 1946. P. L. 393, 79th Cong., to July 1, 1947. P. L. 112, 80th Cong., to July 1, 1948. P. L. 635, 80th Cong., to July 1, 1949. P. L. 137, 81st Cong., to July 1, 1950. |