Estates of Decedents Dying During 1944 to 1949, Inclusive Sec. 841. Cross references. For authority of the Commissioner, with the approval of the Secretary, to prescribe and publish all needful rules and regulations for the enforcement of this subchapter, see section 3791. For other administrative provisions of a general character, see subtitle D. Subpart IV-Special Classes of Residents Sec. 850. Missionaries in foreign service. Missionaries duly commissioned and serving under boards of foreign missions of the various religious denominations of the United States, dying while in the foreign missionary service of such boards, shall not, by reason merely of their intention to permanently remain in such foreign service, be deemed nonresidents of the United States, but shall be presumed to be residents of the State, the District of Columbia, or the Territories of Alaska or Hawaii wherein they respectively resided at the time of their commission and their departure for such foreign service. Sec. 850, I. R. C., supra, originated 1921 as Sec. For any amendments prior to 1944, see- Sec. 851. Citizens with estates in China. The term "resident” as used in this subchapter includes a citizen of the United States with respect to whose property any probate or administration proceedings are had in the United States Court for China. Sec. 851, I. R. C., supra, originated 1921 as Sec. 411 (a), R. A. of 1921. For any amendments prior to 1944, see Eighth Edition, p. 538, Ninth Edition, p. 1006. PART III-ESTATES OF NONRESIDENTS NOT CITIZENS OF THE UNITED STATES Sec. 860. Rate of tax. A tax equal to the sum of the percentages set forth in section 810 of the value of the net estate (determined as provided in section 861) shall be imposed upon the transfer of the net estate of every decedent nonresident not a citizen of the United States dying after the date of the enactment of this title. Sec. 861. Net estate. Sec. 861. (a) Deductions allowed.-For the purpose of the tax the value of the net estate shall be determined, in the case of a nonresident not a citizen of the United States, by deducting from the value of that part of his gross estate (determined as provided in section 811), which at the time of his death is situated in the United States. Sec. 861. (a) (1) Expenses, losses, indebtedness, · and taxes.-That proportion of the deductions specified in section 812 (b) (other than the deductions described in the following sentence) which the value of such part bears to the value of his entire gross estate, wherever situated. Any deduction allowable under section 812 (b) in the case of a claim against the estate which was founded upon a promise or agreement but was not contracted for an adequate and full consideration in money or money's worth shall be allowable under this paragraph to the extent that it would be allowable as a deduction under paragraph (3) if such promise or agreement constituted a bequest. Sec. 861 (a) (1), I. R. C., supra, originated 1916 For any amendments prior to 1944, see- Ninth Edition, p. 1008. Sec. 861. (a) (2) Property previously taxed.—An amount equal to the value of any property (A) forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent, or (B) transferred to the decedent by gift within five years prior to his death, where such property can be identified as having been received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received. Property includible in the gross estate of the prior decedent under section 811 (f) and property included in total gifts of the donor under section 1000 (c) received by the decedent described in this paragraph shall, for the purposes of this paragraph, be considered a bequest of such prior decedent or gift of such donor. This deduction shall be allowed only where a gift tax imposed under chapter 4, or under Title III of the Revenue Act of 1932, 47 Stat. 245, or an estate tax imposed under this chapter or any prior Act of Congress, was finally determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the amount finally determined as the value of such property in determining the value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such property is included in that part of the decedent's gross estate which at the time of his death is situated in the United States, and only if in determining the value of the net estate of the prior decedent no deduction was allowable under this paragraph, section 812 (c), or the corresponding provisions of any prior Act of Congress, in respect of the property or property given in exchange therefor. Where a deduction was allowed of any mortgage or other lien in determining the gift tax, or the estate tax of the prior decedent, which was paid in whole or in part prior to the decedent's death, then the deduction allowable under this paragraph shall be reduced by the amount so paid. The deduction under this paragraph shall be reduced by an amount which bears the same ratio to the amounts allowed as deductions under paragraphs (3) and (4) and the amount of general claims allowed as deduction under paragraph (1) of this subsection as the amount otherwise deductible under this paragraph bears to property subject to general claims. If the property includible in the gross estate to which the deduction under the paragraph is attributable is not wholly property subject to general claims Estates of Decedents Dying During 1944 to 1949, Inclusive (A) before the application of the preceding sentence, the amount of the deduction under this paragraph shall be reduced by that part of such amount as the value, at the time of the decedent's death, of such property (to which such deduction is attributable) subject to claims but not to general claims is of the value, at the time of the decedent's death, of such property, and (B) in the application of the preceding sentence in reducing the balance, if any, of such deduction, "the amount otherwise deductible under this paragraph" shall be only that part of such amount otherwise deductible (determined without regard to subparagraph (A)) as the value at the time of the decedent's death, of such property (to which such deduction is attributable) subject to general claims is of the value, at the time of the decedent's death of such property. For the purposes of the two preceding sentences and this sentence, "general claims" are the amounts allowed as deductions under paragraph (1) of this subsection which, under the applicable law, in the final adjustment and settlement of the estate may be enforced against that part of any property subject to claims, as defined in subsection (b) of section 812 which at the time of the decedent's death is in the United States, and "property subject to general claims" is the value, at the time of the decedent's death, of such property subject to claims, reduced by the value, at the time of the decedent's death, of that part of such property subject to claims against which. amounts allowed as deductions under paragraph (1) of this subsection which are not general claims may be enforced, under the applicable law, in the final adjustment and settlement of the estate. Where the property referred to in this paragraph consists of two or more items the aggregate value of such items shall be used for the purpose of computing the deduction. Sec. 861 (a) (2), I. R. C., supra, originated 1918 as Sec. 403 (b) (2), R. A. of 1918. For any amendments prior to 1944, see Eighth Edition, p. 502, Ninth Edition, p. 1008. Sec. 861. (a) (3) Transfers for public, charitable, and religious uses.-The amount of all bequests, legacies, devises, or transfers (including the interest which falls into any such bequest, legacy, devise, or transfer as a result of an irrevocable disclaimer of a bequest, legacy, devise, transfer, or power, if the disclaimer is made prior to the date prescribed for the filing of the estate tax return or, in the case of a decedent dying on or before October 21, 1942, if the disclaimer is made prior to September 1, 1944) to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, or to a trustee or trustees, or a fraternal society, order, or association operating under the lodge system, but only if such contributions or gifts are to be used within the United States by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, and no substantial part of the activities of such trustee or trustees, or of such fraternal society, order, or association, is carrying on propaganda, or otherwise attempting, to influence legislation, or to or for the use of the United Nations, but only if such bequests, legacies, devises, or transfers to or for the use of the United Nations are to be used exclusively for the acquisition of a site in the city of New York for its headquarters, and the death of the decedent occurred after December 1, 1946, and before December 2, 1947. Property includible in the decedent's gross estate under section 811 (f) received by a donee described in this paragraph shall, for the purposes of this paragraph, be considered a bequest of such decedent. If the tax imposed by section 860, or any estate, succession, legacy, or inheritance taxes, are, either by the terms of the will, by the law of the jurisdiction under which the estate is administered, or by the law of the jurisdiction imposing the particular tax, payable in whole or in part out of the bequests, legacies, or devises otherwise deductible under this paragraph, then the amount deductible under this paragraph shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes. The amount of the deduction under this paragraph for any transfer shall not exceed the value of the transferred property required to be included in the gross estate. Sec. 861 (a) (3), I. R. C., supra, amended by Sec. 511 (b), R. A. of 1943, by adding first language in italics. Retroactivity Sec. 511 (c) of said Act makes amendment applicable to estates of decedents dying after Feb. 10, 1939. Second Amendment Sec. 861 (a) (3), I. R. C., supra, amended by Sec. 5, Act of Feb. 26, 1947 (61 Stat. 6) by adding second language in italics. See fn. 21a following Sec. 811 (f), supra. Sec. 861 (a) (3), I. R. C., supra, originated 1918 Sec. 861. (a) (4) Exemption.-An exemption of $2,000. Sec. 861 (a) (4), I. R. C., supra, originated 1942 For any amendments prior to 1944, see- Sec. 861. (b) Condition of allowance of deductions.-No deduction shall be allowed in the case of a nonresident not a citizen of the United States unless the executor includes in the return required to be filed under section 864 the value at the time of his Estates of Decedents Dying During 1944 to 1949, Inclusive death of that part of the gross estate of such nonresident not situated in the United States. Sec. 861 (b), I. R. C., supra, originated 1916 as Sec. 203 (b), R. A. of 1916. For any amendments prior to 1944, see- Ninth Edition, p. 1016. Sec. 862. Property within the United States. For the purpose of this subchapter— Sec. 862. (a) Stock in domestic corporation.Stock in a domestic corporation owned and held by a nonresident not a citizen of the United States shall be deemed property within the United States; and Sec. 862. (b) Revocable transfers and transfers in contemplation of death.-Any property of which the decedent has made a transfer, by trust or otherwise, within the meaning of section 811 (c) or (d), shall be deemed to be situated in the United States, if so situated either at the time of the transfer, or at the time of the decedent's death. Sec. 862, I. R. C., supra, originated 1916 as Sec. 202 (c), R. A. of 1916. For any amendments prior to 1944, see Eighth Edition, p. 506, Ninth Edition, p. 1018. Sec. 863. Property without the United States. The following items shall not, for the purpose of this subchapter, be deemed property within the United States: Sec. 863. (a) Proceeds of life insurance.-The amount receivable as insurance upon the life of a nonresident not a citizen of the United States; and Sec. 863. (b) Bank deposits.—Any moneys deposited with any person carrying on the banking business, by or for a nonresident not a citizen of the United States who was no engaged in business in the United States at the time of his death. Sec. 863, I. R. C., supra, originated 1921 as Sec. 403 (b) (3), R. A. of 1921. For any amendments prior to 1944, see Eighth Edition, p. 508, Ninth Edition, p. 1018. Sec. 864. Returns. Sec. 864. (a) Requirement. Sec. 864. (a) (1) Returns by executor.-In the case of the estate of every nonresident not a citizen of the United States any part of whose gross estate situated in the United States, exceeds the amount of the specific exemption provided in section 861 (a) (4), the executor shall make a return under oath in duplicate, setting forth (A) the value of that part of the gross estate of the decedent situated in the United States at the time of his death; (B) the deductions allowed under section 861; (C) the value of the net estate of the decedent as defined in section 861; (D) the tax paid or payable thereon; or such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to establish the correct tax. Sec. 864. (a) (2) Returns by beneficiaries.—If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. Sec. 864. (b) Time for filing.-The return required of the executor under subsection (a) shall be filed at such times and in such manner as may be required by regulations made pursuant to law. Sec. 864. (c) Place for filing.-The return required of the executor under subsection (a) shall be filed with the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of such district as may be designated by the Commissioner. Sec. 864, I. R. C., supra, originated 1939 as Sec. For any amendments prior to 1944, see- Sec. 865. Cross reference. For missionaries in foreign service, see section 850. PART IV-SUPPLEMENTAL PROVISIONS Supplement A-Assessment and Collection of Deficiencies Sec. 870. Definition of deficiency. As used in this subchapter in respect of the tax imposed by this subchapter the term "deficiency" means Sec. 870. (1) The amount by which the tax imposed by this subchapter exceeds the amount shown as the tax by the executor upon his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such tax; or Sec. 870. (2) If no amount is shown as the tax by the executor upon his return, or if no return is made by the executor, then the amount by which the tax exceeds the amounts previously assessed (or collected without assessment) as a deficiency; but such amounts previously assessed, or collected without assessment, shall first be decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such tax. Sec. 870, I. R. C., supra, originated 1924 as Sec. For any amendments prior to 1944, see- Sec. 871. Procedure in general. Sec. 871. (a) (1) Petition to Board of Tax Appeals.-If the Commissioner determines that there Estates of Decedents Dying During 1944 to 1949, Inclusive is a deficiency in respect of the tax imposed by this subchapter, the Commissioner is authorized to send notice of such deficiency to the executor by registered mail. Within 90 days after such notice is mailed (not counting Saturday, Sunday or a legal holiday in the District of Columbia as the ninetieth day), the executor may file a petition with the Board of Tax Appeals for a redetermination of the deficiency. No assessment of a deficiency in respect of the tax imposed by this subchapter and no distraint or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the executor, nor until the expiration of such 90-day period, nor, if a petition has been filed with the Board, until the decision of the Board has become final. Notwithstanding the provisions of section 3653 (a) the making of such assessment or the beginning of such proceeding or distraint during the time such prohibition is in force may be enjoined by a proceeding in the proper court. If the notice is addressed to an executor outside the States of the Union and the District of Columbia, the period specified in this paragraph shall be one hundred and fifty days in lieu of ninety days. Sec. 871 (a) (1), I. R. C., supra, amended by Sec. 203 (a), Act of Dec. 29, 1945, by adding word "Saturday." Sec. 203 (b) of said Act makes amendment effective as of Sept. 8, 1945. Sec. 871 (a) (1), I. R. C., supra, originated 1924 as Sec. 308 (a), R. A. of 1924. For any amendments prior to 1944, see Eighth Edition, p. 515, Ninth Edition, p. 1022. Sec. 871. (a) (2) Cross references.— For exceptions to the restrictions imposed by this subsection see Subsection (d) of this section, relating to waivers by the executor; Subsection (f) of this section, relating to notifications of mathematical errors appearing upon the face of the return. Section 872, relating to jeopardy assessments; and Section 1145, relating to assessment or collection of the amount of the deficiency determined by the Board pending court review. Sec. 871. (b) Collection of deficiency found by Board.-If the executor files a petition with the Board, the entire amount redetermined as the deficiency by the decision of the Board which has become final shall be assessed and shall be paid upon notice and demand from the collector. No part of the amount determined as a deficiency by the Commissioner but disallowed as such by the decision of the Board which has become final shall be assessed or be collected by distraint or by proceeding in court with or without assessment. Sec. 871 (b), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see Eighth Edition, p. 516, Ninth Edition, p. 1024. Sec. 871. (c) Failure to file petition.-If the executor does not file a petition with the Board within the time prescribed in subsection (a) the deficiency, notice of which has been mailed, to the exec utor, shall be assessed, and shall be paid upon notice and demand from the collector. Sec. 871 (c), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see Eighth Edition, p. 516, Ninth Edition, p. 1024. Sec. 871. (d) Waiver of restrictions.-The executor shall at any time have the right, by a signed notice in writing filed with the Commissioner, to waive the restrictions provided in subsection (a) on the assessment and collection of the whole or any part of the deficiency. Sec. 871 (d), I. R. C., supra, originated 1926 as For any amendments prior to 1944, see- Ninth Edition, p. 1024. Sec. 871. (e) Increase of deficiency after notice mailed.-The Board shall have jurisdiction to redetermine the correct amount of the deficiency even if the amount so redetermined is greater than the amount of the deficiency, notice of which has been mailed to the executor, and to determine whether any additional amount or addition to the tax should be assessed, if claim therefor is asserted by the Commissioner at or before the hearing or a rehearing. Sec. 871 (e), I. R. C., supra, originated 1926 as For any amendments prior to 1944, see- Sec. 871. (f) Further deficiency letters restricted.—If the Commissioner has mailed to the executor notice of a deficiency as provided in subsection (a), and the executor files a petition with the Board within the time prescribed in such subsection, the Commissioner shall have no right to determine any additional deficiency, except in the case of fraud, and except as provided in subsection (e) or section 872 (c). If the executor is notified that, on account of a mathematical error appearing upon the face of the return, an amount of tax in excess of that shown upon the return is due, and that an assessment of the tax has been or will be made on the basis of what would have been the correct amount of tax but for the mathematical error, such notice shall not be considered, for the purposes of this subsection or of subsection (a), or of section 911, as a notice of a deficiency, and the executor shall have no right to file a petition with the Board of Tax Appeals based on such notice, nor shall such assessment or collection be prohibited by the provisions of subsection (a). Sec. 871 (f), I. R. C., supra, originated 1926 as For any amendments prior to 1944, see Eighth Edition, p. 517, Ninth Edition, p. 1026. Sec. 871. (g) Final decisions of Board.-For the purposes of this subchapter the date on which a decision of the Board becomes final shall be determined according to the provisions of section 1140. Sec. 871 (g), I. R. C., supra, originated 1926 as Estates of Decedents Dying During 1944 to 1949, Inclusive For any amendments prior to 1944, see Eighth Edition, p. 517, Ninth Edition, p. 1026. Sec. 871. (h) Extension of time for payment of deficiency.-Where it is shown to the satisfaction of the Commissioner that the payment of a deficiency upon the date prescribed for the payment thereof will result in undue hardship to the estate, the Commissioner, under regulations prescribed by the Commissioner, with the approval of the Secretary (except where the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax), may grant an extension for the payment of such deficiency or any part thereof for a period not in excess of four years. If an extension is granted, the Commissioner may require the executor to furnish a bond in such amount, not exceeding double the amount of the deficiency, and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the deficiency in accordance with the terms of the extension. such case the running of the statute of limitations for assessment and collection, as provided in section 874, shall be suspended for the period of any such extension. Sec. 871 (h), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see Eighth Edition, p. 518, In Sec. 871. (i) 50 per cent addition treated as deficiency.—The 50 per centum addition to the tax provided by section 3612 (d) (2) shall, when assessed in connection with an estate tax, be assessed, collected, and paid in the same manner as if it were a deficiency, except that the provisions of section 891 shall not be applicable. Sec. 871 (1), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see- Ninth Edition, p. 1028. Sec. 872. Jeopardy assessments. Sec. 872. (a) Authority for making.-If the Commissioner believes that the assessment or collection of a deficiency will be jeopardized by delay, he shall immediately assess such deficiency (together with all interest, additional amounts, or additions to the tax provided for by law) and notice and demand shall be made by the collector for the payment thereof. Sec. 872. (b) Deficiency letters.-If the jeopardy assessment is made before any notice in respect of the tax to which the jeopardy assessment relates has been mailed under section 871 (a), then the Commissioner shall mail a notice under such subsection within 60 days after the making of the assessment. Sec. 872 (b), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see- Sec. 872. (c) Amount assessable before decision of Board.-The jeopardy assessment may be made in respect of a deficiency greater or less than that notice of which has been mailed to the executor, despite the provisions of section 871 (f) and whether or not the executor has theretofore filed a petition with the Board of Tax Appeals. The Commissioner may, at any time before the decision of the Board is rendered, abate such assessment, or any unpaid portion thereof, to the extent that he believes the assessment to be excessive in amount. The Commissioner shall notify the Board of the amount of such assessment, or abatement, if the petition is filed with the Board before the making of the assessment or is subsequently filed, and the Board shall have jurisdiction to redetermine the entire amount of the deficiency and of all amounts assessed at the same time in connection therewith. Sec. 872 (c), I. R. C., supra, originated 1924 as For any amendments prior to 1944, see- Sec. 872. (d) Amount assessable after decision of Board. If the jeopardy assessment is made after the decision of the Board is rendered such assessment may be made only in respect of the deficiency determined by the Board in its decision. Sec. 872. (e) Expiration of right to assess.—A jeopardy assessment may not be made after the decision of the Board has become final or after the executor has filed a petition for review of the decision of the Board. Sec. 872 (d), (e), I. R. C., supra, originated 1926 For any amendments prior to 1944, see- Ninth Edition, p. 1030. Sec. 872. (f) Bond to stay collection.-When a jeopardy assessment has been made the executor, within 30 days after notice and demand from the collector for the payment of the amount of the assessment, may obtain a stay of collection of the whole or any part of the amount of the assessment by filing with the collector a bond in such amount, not exceeding double the amount as to which the stay is desired, and with such sureties, as the collector deems necessary, conditioned upon the payment of so much of the amount, the collection of which is stayed by the bond, as is not abated by a decision of the Board which has become final, together with interest thereon as provided in section 892 or 893 (b) (4). If any portion of the jeopardy assessment is abated by the Commissioner before the decision of the Board is rendered, the bond shall, at the request of the taxpayer, be proportionately reduced. Sec. 872. (g) Same-Further conditions.-If the bond is given before the executor has filed his petition with the Board under subsection (a) of section 871, the bond shall contain a further condition that if a petition is not filed within the period provided in such subsection, then the amount the collection of which is stayed by the bond will be paid on notice and demand at any time after the expiration of such period, together with interest thereon at the rate of 6 |