26 CFR 20.2013-6 - Examples.
§ 20.2013-6
Examples.
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$1,000,000.00Expenses, indebtedness, etc.90,000.00A's adjusted gross estate910,000.00Marital deduction$100,000.00Exemption60,000.00160,000.00A's taxable estate750,000.00A's gross estate tax233,200.00Credit for State death taxes23,280.00A's net estate tax payable209,920.00“First limitation” = $209,920.00 (§ 20.2013-2(b)) × [($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
(c) “Second limitation” on credit for B's estate (§ 20.2013-3):
(1) B's net estate tax payable as described in § 20.2013-3(a)(1) (previously taxed transfer included):
B's gross estate$500,000.00Expenses, indebtedness, etc.$40,000.00Charitable deduction150,000.00Exemption60,000.00250,000.00B's taxable estate250,000.00B's gross estate tax$65,700.00Credit for State death taxes3,920.00B's net estate tax payable61,780.00
(2) B's net estate tax payable as described in § 20.2013-3(a)(2) (previously taxed transfer excluded):
B's gross estate$400,000.00Expenses, indebtedness, etc$40,000.00Charitable deduction (§ 20.2013-3(b))=$150,000.00 − [$150,000.00 × ($200,000.00 − $100,000.00 ÷ $500,000.00 − $40,000.00)]117,391.30Exemption60,000.00217,391.30B's taxable estate182,608.70B's gross estate tax45,482.61Credit for State death taxes2,221.61B's net estate tax payable43,260.00
(3) “Second limitation”:
Subparagraph (1)$61,780.00Less: 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))×100 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$250,000.00Expenses, indebtedness, etc.$50,000.00Exemption$60,000.00$110,000.00C's taxable estate140,000.00C's gross estate tax32,700.00Credit for State death taxes1,200.00C's net estate tax payable31,500.00“First limitation” = $31,500.00 (§ 20.2013-2(b)) × [$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
(c) “Second limitation” on credit for B's estate (§ 20.2013-3(c)):
(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$350,000.00Expenses, indebtedness, etc$40,000.00Charitable deduction (§ 20.2013-3(b)) = $150,000.00 − [$150,000.00 × ($200,000.00 − $100,000.00 $50,000.00) ÷ ($500,000.00 − $40,000.00)]101,086.96Exemption60,000.00201,086.96B's taxable estate148,913.04B's gross estate tax35,373.91Credit for State death taxes1,413.91B's net estate tax payable33,960.00
(3) “Second limitation”:
Subparagraph (1)$61,780.00Less: Subparagraph (2)33,960.00$27,820.00
(4) Apportionment of “second limitation” on credit:
Transfer from A (§ 20.2013-4)$100,000.00Transfer from C (§ 20.2013-4)50,000.00Total150,000.00Portion of “second limitation” attributable to transfer from A (100/150 of $27,820.00)18,546.67Portion 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)) × 100 percent (percentage to be taken into account under § 20.2013-1(c))$18,546.67Credit 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)) × 80 percent (percentage to be taken into account under § 20.2013-1(c))7,418.66Total credit for tax on prior transfers25,965.33
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