26 CFR 20.2014-2 - “First limitation”.
(a) The amount of a particular foreign death tax attributable to property situated in the country imposing the tax and included in the decedent's gross estate for Federal estate tax purposes is the “first limitation.” Thus, the credit for any foreign death tax is limited to an amount, A, which bears the same ratio to B (the amount of the foreign death tax without allowance of credit, if any, for Federal estate tax), as C (the value of the property situated in the country imposing the foreign death tax, subjected to the foreign death tax, included in the gross estate and for which a deduction is not allowed under section 2053(d)) bears to D (the value of all property subjected to the foreign death tax). Stated algebraically, the “first limitation” (A) equals -
Value of property in foreign country subjected to foreign death tax, included in gross estate and for which a deduction is not allowed under section 2053(d)(C) ÷ Value of all property subjected to foreign death tax (D) × Amount of foreign death tax (B)
|Inheritance tax of surviving spouse:|
|Value of stock||$20,000|
|Value of bonds||50,000|
|Tax (16 percent rate)||11,200|
|Inheritance tax of son:|
|Value of stock||60,000|
|Value of bonds||$30,000|
|Tax (16 percent rate)||14,400|
(b) If a foreign country imposes more than one kind of death tax or imposes taxes at different rates upon the several shares of an estate, or if a foreign country and a political subdivision or possession thereof each imposes a death tax, a “first limitation” is to be computed separately for each tax or rate and the results added in order to determine the total “first limitation.” The application of this paragraph may be illustrated by the following example:
|“First limitation” with respect to inheritance tax of surviving spouse:|
|[$20,000 (factor C of the ratio stated at § 20.
|“First limitation” with respect to inheritance tax of son:|
|[$60,000 (factor C of the ratio stated at § 20.
|Total “first limitation” on the credit for foreign death taxes||14,000|
- 26 CFR 20.2014-2 — “First Limitation”.
- 26 CFR 20.2014-1 — Credit for Foreign Death Taxes.
- 26 CFR 20.2014-7 — Limitation on Credit if a Deduction for Foreign Death Taxes Is Allowed Under Section 2053(d).
- 26 CFR 20.2014-3 — “Second Limitation”.
- 26 CFR 20.2014-4 — Application of Credit in Cases Involving a Death Tax Convention.