CFR > Title 26 - Internal Revenue > CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY > SUBCHAPTER B—ESTATE AND GIFT TAXES (Parts 20–27) > PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954 > 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:

Code of Federal Regulations

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
Code of Federal Regulations 245
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) ) × [($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 $500,000.00
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 × ($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))×100 percent (percentage to be taken into account under § 20.2013-1(c) ) $18,520.00

Code of Federal Regulations

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) ) × [$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 $350,000.00
Expenses, indebtedness, etc $40,000.00
Charitable 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)] 101,086.96
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
Code of Federal Regulations 246
(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)) × 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)) × 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