Code of Federal Regulations Title 26. Internal Revenue § 26.20.2013–6 Examples

Current as of October 02, 2022 | Updated by FindLaw Staff

The application of §§ 20.2013–1 to 20.2013–5 may be further illustrated by the following examples:

Example (1).(a) A died December 1, 1953, leaving a gross estate of $1,000,000. Expenses, indebtedness, etc., amounted to $90,000. A bequeathed $200,000 to B, his wife, $100,000 of which qualified for the marital deduction. B died November 1, 1954, leaving a gross estate of $500,000. Expenses, indebtedness, etc., amounted to $40,000. B bequeathed $150,000 to charity. A and B were both citizens of the United States. The estates of A and B both paid State death taxes equal to the maximum credit allowable for State death taxes. Death taxes were not a charge on the bequest to B.

(b) “First limitation” on credit for B's estate (§ 20.2013–2):

A's gross estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$1,000,000.00
Expenses, indebtedness, etc.․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	90,000.00
	A's adjusted gross estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	910,000.00
Marital deduction․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$100,000.00
Exemption․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	60,000.00
			160,000.00
	A's taxable estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	750,000.00
	A's gross estate tax․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	233,200.00
Credit for State death taxes․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	23,280.00
	A's net estate tax payable․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	209,920.00

“First limitation” = $209,920.00 (§ 20.2013–2(b)) x [($200,000.00 – $100,000.00) (§ 20.2013–4) ÷ ($750,000.00 – $209,920.00 – $23,280.00 + $60,000.00) (§ 20.2013–2(c))]	$36,393.90

(1) B's net estate tax payable as described in § 20.2013–3(a)(1)(previously taxed transfer included):

B's gross estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$500,000.00
Expenses, indebtedness, etc.․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$40,000.00
Charitable deduction․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	150,000.00
Exemption․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	60,000.00
			250,000.00
	B's taxable estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	250,000.00
B's gross estate tax․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$65,700.00
Credit for State death taxes․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	3,920.00
	B's net estate tax payable․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	61,780.00

(2) B's net estate tax payable as described in § 20.2013–3(a)(2) (previously taxed transfer excluded):

B's gross estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$400,000.00
Expenses, indebtedness, etc.․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$40,000.00
Charitable deduction (§ 20.2013–3(b)) = $150,000.00 – [$150,000.00 x ($200,000.00 – $100,000.00 ÷ $500,000.00 – $40,000.00)]	117,391.30
Exemption․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	60,000.00
			217,391.30
B's taxable estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	182,608.70
B's gross estate tax․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	45,482.61
Credit for State death taxes․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	2,221.61
	B's net estate tax payable․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	43,260.00

(3) “Second limitation”:

Subparagraph (1)․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$61,780.00
Less: Subparagraph (2)․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	43,260.00
		$18,520.00

(d) Credit of B's estate for tax on prior transfers (§ 20.2013–1(c)):

Credit for tax on prior transfers = $18,520.00 (lower of paragraphs (b) and (c))x100 percent (percentage to be taken into account under § 20.2013–1(c))

$18,520.00

Example (2).(a) The facts are the same as those contained in example (1) of this paragraph with the following additions. C died December 1, 1950, leaving a gross estate of $250,000. Expenses, indebtedness, etc., amounted to $50,000. C bequeathed $50,000 to B. C was a citizen of the United States. His estate paid State death taxes equal to the maximum credit allowable for State death taxes. Death taxes were not a charge on the bequest to B.

(b) “First limitation” on credit for B's estate (§ 20.2013–2(d))—

(1) With respect to the property received from A:

“First limitation” = $36,393.90 (this computation is identical with the one contained in paragraph (b) of example (1) of this section).

(2) With respect to the property received from C:

C's gross estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$250,000.00
Expenses, indebtedness, etc.․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$50,000.00
Exemption․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$60,000.00
			$110,000.00
	C's taxable estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	140,000.00
C's gross estate tax․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	32,700.00
Credit for State death taxes․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	1,200.00
	C's net estate tax payable․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	31,500.00
“First limitation” = $31,500.00 (§ 20.2013–2(b)) x [$50,000.00 (§ 20.2013–4) ÷ ($140,000.00 – $31,500.00 – $1,200.00 + $60,000.00) (§ 20.2013–2(c))]	$9,414.23

(1) B's net estate tax payable as described in § 20.2013–3(a)(1) (previously taxed transfers included)=$61,780.00 (this computation is identical with the one contained in paragraph (c)(1) of example (1) of this section).

(2) B's net estate tax payable as described in § 20.2013–3(a)(2)(previously taxed transfers excluded):

B's gross estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$350,000.00
Expenses, indebtedness, etc.․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$40,000.00
Charitable deduction (§ 20.2013–3(b)) = $150,000.00 – [$150,000.00 x ($200,000.00 – $100,000.00 + $50,000.00) ÷ ($500,000.00 – $40,000.00)]	101,086.96
Exemption․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	60,000.00
			201,086.96
	B's taxable estate․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	148,913.04
B's gross estate tax․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	35,373.91
Credit for State death taxes․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	1,413.91
	B's net estate tax payable․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	33,960.00

(3) “Second limitation”:

Subparagraph (1)․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$61,780.00
Less: Subparagraph (2)․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	33,960.00
		$27,820.00

(4) Apportionment of “second limitation” on credit:

Transfer from A (§ 20.2013–4)․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	$100,000.00
Transfer from C (§ 20.2013–4)․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	50,000.00
	Total․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	150,000.00
Portion of “second limitation” attributable to transfer from A (100/150 of $27,820.00)	18,546.67
Portion of “second limitation” attributable to transfer from C (50/150 of $27,820.00)	9,273.33

(d) Credit of B's estate for tax on prior transfers (§ 20.2013–1(c)):

Credit for tax on transfer from A =
	$18,546.67 (lower of “first limitation” computed in paragraph (b)(1) and “second limitation” apportioned to A's transfer in paragraph (c)(4)) x 100 percent (percentage to be taken into account under § 20.2013–1(c))	$18,546.67
Credit for tax on transfer from C =
	$9,273.33 (lower of “first limitation” computed in paragraph (b)(2) and “second limitation” apportioned to B's transfer in paragraph (c)(4)) x 80 percent (percentage to be taken into account under § 20.2013–1(c))	7,418.66
	Total credit for tax on prior transfers․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․․	25,965.33

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Cite this article: FindLaw.com - Code of Federal Regulations Title 26. Internal Revenue § 26.20.2013–6 Examples - last updated October 02, 2022 | https://codes.findlaw.com/cfr/title-26-internal-revenue/cfr-sect-26-20-2013-6/

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