§ 2001. Imposition and rate of tax

• (a) A tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.
• (b) The tax imposed by this section shall be the amount equal to the excess (if any) of—
  • (1) a tentative tax computed under subsection (c) on the sum of—
    • (A) the amount of the taxable estate, and
    • (B) the amount of the adjusted taxable gifts, over
  • (2) the aggregate amount of tax which would have been payable under chapter 12 with respect to gifts made by the decedent after December 31, 1976 , if the modifications described in subsection (g) had been applicable at the time of such gifts.
• (c) If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $10,000 18 percent of such amount. Over $10,000 but not over $20,000 $1,800, plus 20 percent of the excess of such amount over $10,000. Over $20,000 but not over $40,000 $3,800, plus 22 percent of the excess of such amount over $20,000. Over $40,000 but not over $60,000 $8,200 plus 24 percent of the excess of such amount over $40,000. Over $60,000 but not over $80,000 $13,000, plus 26 percent of the excess of such amount over $60,000. Over $80,000 but not over $100,000 $18,200, plus 28 percent of the excess of such amount over $80,000. Over $100,000 but not over $150,000 $23,800, plus 30 percent of the excess of such amount over $100,000. Over $150,000 but not over $250,000 $38,800, plus 32 percent of the excess of such amount over $150,000. Over $250,000 but not over $500,000 $70,800, plus 34 percent of the excess of such amount over $250,000. Over $500,000 but not over $750,000 $155,800, plus 37 percent of the excess of such amount over $500,000. Over $750,000 but not over $1,000,000 $248,300, plus 39 percent of the excess of such amount over $750,000. Over $1,000,000 $345,800, plus 40 percent of the excess of such amount over $1,000,000.
• (d) For purposes of subsection (b)(2), if—
  • (1) the decedent was the donor of any gift one-half of which was considered under section 2513 as made by the decedent’s spouse, and
  • (2) the amount of such gift is includible in the gross estate of the decedent,
• (e) If—
  • (1) the decedent’s spouse was the donor of any gift one-half of which was considered under section 2513 as made by the decedent, and
  • (2) the amount of such gift is includible in the gross estate of the decedent’s spouse by reason of section 2035,
• (f)
  • (1) If the time has expired under section 6501 within which a tax may be assessed under chapter 12 (or under corresponding provisions of prior laws) on—
    • (A) the transfer of property by gift made during a preceding calendar period (as defined in section 2502(b)); or
    • (B) an increase in taxable gifts required under section 2701(d),
  • (2) For purposes of paragraph (1), a value shall be treated as finally determined for purposes of chapter 12 if—
    • (A) the value is shown on a return under such chapter and such value is not contested by the Secretary before the expiration of the time referred to in paragraph (1) with respect to such return;
    • (B) in a case not described in subparagraph (A), the value is specified by the Secretary and such value is not timely contested by the taxpayer; or
    • (C) the value is determined by a court or pursuant to a settlement agreement with the Secretary.
• (g)
  • (1) For purposes of applying subsection (b)(2) with respect to 1 or more gifts, the rates of tax under subsection (c) in effect at the decedent’s death shall, in lieu of the rates of tax in effect at the time of such gifts, be used both to compute—
    • (A) the tax imposed by chapter 12 with respect to such gifts, and
    • (B) the credit allowed against such tax under section 2505, including in computing—
      • (i) the applicable credit amount under section 2505(a)(1), and
      • (ii) the sum of the amounts allowed as a credit for all preceding periods under section 2505(a)(2).
  • (2) The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this section with respect to any difference between—
    • (A) the basic exclusion amount under section 2010(c)(3) applicable at the time of the decedent’s death, and
    • (B) the basic exclusion amount under such section applicable with respect to any gifts made by the decedent.

§ 2002. Liability for payment

The tax imposed by this chapter shall be paid by the executor.

§ 2010. Unified credit against estate tax

• (a) A credit of the applicable credit amount shall be allowed to the estate of every decedent against the tax imposed by section 2001.
• (b) The amount of the credit allowable under subsection (a) shall be reduced by an amount equal to 20 percent of the aggregate amount allowed as a specific exemption under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) with respect to gifts made by the decedent after September 8, 1976 .
• (c)
  • (1) For purposes of this section, the applicable credit amount is the amount of the tentative tax which would be determined under section 2001(c) if the amount with respect to which such tentative tax is to be computed were equal to the applicable exclusion amount.
  • (2) For purposes of this subsection, the applicable exclusion amount is the sum of—
    • (A) the basic exclusion amount, and
    • (B) in the case of a surviving spouse, the deceased spousal unused exclusion amount.
  • (3)
    • (A) For purposes of this subsection, the basic exclusion amount is $5,000,000.
    • (B) In the case of any decedent dying in a calendar year after 2011, the dollar amount in subparagraph (A) shall be increased by an amount equal to—
      • (i) such dollar amount, multiplied by
      • (ii) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting “calendar year 2010” for “calendar year 2016” in subparagraph (A)(ii) thereof.
    • (C) In the case of estates of decedents dying or gifts made after December 31, 2017 , and before January 1, 2026 , subparagraph (A) shall be applied by substituting “$10,000,000” for “$5,000,000”.
  • (4) For purposes of this subsection, with respect to a surviving spouse of a deceased spouse dying after December 31, 2010 , the term “deceased spousal unused exclusion amount” means the lesser of—
    • (A) the basic exclusion amount, or
    • (B) the excess of—
      • (i) the applicable exclusion amount of the last such deceased spouse of such surviving spouse, over
      • (ii) the amount with respect to which the tentative tax is determined under section 2001(b)(1) on the estate of such deceased spouse.
  • (5)
    • (A) A deceased spousal unused exclusion amount may not be taken into account by a surviving spouse under paragraph (2) unless the executor of the estate of the deceased spouse files an estate tax return on which such amount is computed and makes an election on such return that such amount may be so taken into account. Such election, once made, shall be irrevocable. No election may be made under this subparagraph if such return is filed after the time prescribed by law (including extensions) for filing such return.
    • (B) Notwithstanding any period of limitation in section 6501, after the time has expired under section 6501 within which a tax may be assessed under chapter 11 or 12 with respect to a deceased spousal unused exclusion amount, the Secretary may examine a return of the deceased spouse to make determinations with respect to such amount for purposes of carrying out this subsection.
  • (6) The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this subsection.
• (d) The amount of the credit allowed by subsection (a) shall not exceed the amount of the tax imposed by section 2001.

§ 2012. Credit for gift tax

• (a) If a tax on a gift has been paid under chapter 12 (sec. 2501 and following), or under corresponding provisions of prior laws, and thereafter on the death of the donor any amount in respect of such gift is required to be included in the value of the gross estate of the decedent for purposes of this chapter, then there shall be credited against the tax imposed by section 2001 the amount of the tax paid on a gift under chapter 12, or under corresponding provisions of prior laws, with respect to so much of the property which constituted the gift as is included in the gross estate, except that the amount of such credit shall not exceed an amount which bears the same ratio to the tax imposed by section 2001 (after deducting from such tax the unified credit provided by section 2010) as the value (at the time of the gift or at the time of the death, whichever is lower) of so much of the property which constituted the gift as is included in the gross estate bears to the value of the entire gross estate reduced by the aggregate amount of the charitable and marital deductions allowed under sections 2055, 2056, and 2106(a)(2).
• (b) In applying, with respect to any gift, the ratio stated in subsection (a), the value at the time of the gift or at the time of the death, referred to in such ratio, shall be reduced—
  • (1) by such amount as will properly reflect the amount of such gift which was excluded in determining (for purposes of section 2503(a)), or of corresponding provisions of prior laws, the total amount of gifts made during the calendar quarter (or calendar year if the gift was made before January 1, 1971 ) in which the gift was made;
  • (2) if a deduction with respect to such gift is allowed under section 2056(a) (relating to marital deduction), then by the amount of such value, reduced as provided in paragraph (1); and
  • (3) if a deduction with respect to such gift is allowed under sections 2055 or 2106(a)(2) (relating to charitable deduction), then by the amount of such value, reduced as provided in paragraph (1) of this subsection.
• (c) Where the decedent was the donor of the gift but, under the provisions of section 2513, or corresponding provisions of prior laws, the gift was considered as made one-half by his spouse—
  • (1) the term “the amount of the tax paid on a gift under chapter 12”, as used in subsection (a), includes the amounts paid with respect to each half of such gift, the amount paid with respect to each being computed in the manner provided in subsection (d); and
  • (2) in applying, with respect to such gift, the ratio stated in subsection (a), the value at the time of the gift or at the time of the death, referred to in such ratio, includes such value with respect to each half of such gift, each such value being reduced as provided in paragraph (1) of subsection (b).
• (d)
  • (1) For purposes of subsection (a), the amount of tax paid on a gift under chapter 12, or under corresponding provisions of prior laws, with respect to any gift shall be an amount which bears the same ratio to the total tax paid for the calendar quarter (or calendar year if the gift was made before January 1, 1971 ) in which the gift was made as the amount of such gift bears to the total amount of taxable gifts (computed without deduction of the specific exemption) for such quarter or year.
  • (2) For purposes of paragraph (1), the “amount of such gift” shall be the amount included with respect to such gift in determining (for the purposes of section 2503(a), or of corresponding provisions of prior laws) the total amount of gifts made during such quarter or year, reduced by the amount of any deduction allowed with respect to such gift under section 2522, or under corresponding provisions of prior laws (relating to charitable deduction), or under section 2523 (relating to marital deduction).
• (e) No credit shall be allowed under this section with respect to the amount of any tax paid under chapter 12 on any gift made after December 31, 1976 .

§ 2013. Credit for tax on prior transfers

• (a) The tax imposed by section 2001 shall be credited with all or a part of the amount of the Federal estate tax paid with respect to the transfer of property (including property passing as a result of the exercise or non-exercise of a power of appointment) to the decedent by or from a person (herein designated as a “transferor”) who died within 10 years before, or within 2 years after, the decedent’s death. If the transferor died within 2 years of the death of the decedent, the credit shall be the amount determined under subsections (b) and (c). If the transferor predeceased the decedent by more than 2 years, the credit shall be the following percentage of the amount so determined—
  • (1) 80 percent, if within the third or fourth years preceding the decedent’s death;
  • (2) 60 percent, if within the fifth or sixth years preceding the decedent’s death;
  • (3) 40 percent, if within the seventh or eighth years preceding the decedent’s death; and
  • (4) 20 percent, if within the ninth or tenth years preceding the decedent’s death.
• (b) Subject to the limitation prescribed in subsection (c), the credit provided by this section shall be an amount which bears the same ratio to the estate tax paid (adjusted as indicated hereinafter) with respect to the estate of the transferor as the value of the property transferred bears to the taxable estate of the transferor (determined for purposes of the estate tax) decreased by any death taxes paid with respect to such estate. For purposes of the preceding sentence, the estate tax paid shall be the Federal estate tax paid increased by any credits allowed against such estate tax under section 2012, or corresponding provisions of prior laws, on account of gift tax, and for any credits allowed against such estate tax under this section on account of prior transfers where the transferor acquired property from a person who died within 10 years before the death of the decedent.
• (c)
  • (1) The credit provided in this section shall not exceed the amount by which—
    • (A) the estate tax imposed by section 2001 or section 2101 (after deducting the credits provided for in sections 2010, 2012, and 2014) computed without regard to this section, exceeds
    • (B) such tax computed by excluding from the decedent’s gross estate the value of such property transferred and, if applicable, by making the adjustment hereinafter indicated.
  • (2) If the credit provided in this section relates to property received from 2 or more transferors, the limitation provided in paragraph (1) of this subsection shall be computed by aggregating the value of the property so transferred to the decedent. The aggregate limitation so determined shall be apportioned in accordance with the value of the property transferred to the decedent by each transferor.
• (d) The value of property transferred to the decedent shall be the value used for the purpose of determining the Federal estate tax liability of the estate of the transferor but—
  • (1) there shall be taken into account the effect of the tax imposed by section 2001 or 2101, or any estate, succession, legacy, or inheritance tax, on the net value to the decedent of such property;
  • (2) where such property is encumbered in any manner, or where the decedent incurs any obligation imposed by the transferor with respect to such property, such encumbrance or obligation shall be taken into account in the same manner as if the amount of a gift to the decedent of such property was being determined; and
  • (3) if the decedent was the spouse of the transferor at the time of the transferor’s death, the net value of the property transferred to the decedent shall be reduced by the amount allowed under section 2056 (relating to marital deductions), as a deduction from the gross estate of the transferor.
• (e) For purposes of this section, the term “property” includes any beneficial interest in property, including a general power of appointment (as defined in section 2041).
• (f) If section 2032A applies to any property included in the gross estate of the transferor and an additional tax is imposed with respect to such property under section 2032A(c) before the date which is 2 years after the date of the decedent’s death, for purposes of this section—
  • (1) the additional tax imposed by section 2032A(c) shall be treated as a Federal estate tax payable with respect to the estate of the transferor; and
  • (2) the value of such property and the amount of the taxable estate of the transferor shall be determined as if section 2032A did not apply with respect to such property.

§ 2014. Credit for foreign death taxes

• (a) The tax imposed by section 2001 shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property situated within such foreign country and included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). The determination of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States.
• (b) The credit provided in this section with respect to such taxes paid to any foreign country—
  • (1) shall not, with respect to any such tax, exceed an amount which bears the same ratio to the amount of such tax actually paid to such foreign country as the value of property which is—
    • (A) situated within such foreign country,
    • (B) subjected to such tax, and
    • (C) included in the gross estate
  • (2) shall not, with respect to all such taxes, exceed an amount which bears the same ratio to the tax imposed by section 2001 (after deducting from such tax the credits provided by sections 2010 and 2012) as the value of property which is—
    • (A) situated within such foreign country,
    • (B) subjected to the taxes of such foreign country, and
    • (C) included in the gross estate
• (c)
  • (1) The values referred to in the ratio stated in subsection (b)(1) are the values determined for purposes of the tax imposed by such foreign country.
  • (2) The values referred to in the ratio stated in subsection (b)(2) are the values determined under this chapter; but, in applying such ratio, the value of any property described in subparagraphs (A), (B), and (C) thereof shall be reduced by such amount as will properly reflect, in accordance with regulations prescribed by the Secretary, the deductions allowed in respect of such property under sections 2055 and 2056 (relating to charitable and marital deductions).
• (d) The credit provided in this section shall be allowed only if the taxpayer establishes to the satisfaction of the Secretary—
  • (1) the amount of taxes actually paid to the foreign country,
  • (2) the amount and date of each payment thereof,
  • (3) the description and value of the property in respect of which such taxes are imposed, and
  • (4) all other information necessary for the verification and computation of the credit.
• (e) The credit provided in this section shall be allowed only for such taxes as were actually paid and credit therefor claimed within 4 years after the filing of the return required by section 6018, except that—
  • (1) If a petition for redetermination of a deficiency has been filed with the Tax Court within the time prescribed in section 6213(a), then within such 4-year period or before the expiration of 60 days after the decision of the Tax Court becomes final.
  • (2) If, under section 6161, an extension of time has been granted for payment of the tax shown on the return, or of a deficiency, then within such 4-year period or before the date of the expiration of the period of the extension.
• (f) In any case where a deduction is allowed under section 2053(d) for an estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country upon a transfer by the decedent for public, charitable, or religious uses described in section 2055, the property described in subparagraphs (A), (B), and (C) of paragraphs (1) and (2) of subsection (b) of this section shall not include any property in respect of which such deduction is allowed under section 2053(d).
• (g) For purposes of the credits authorized by this section, each possession of the United States shall be deemed to be a foreign country.
• (h) Whenever the President finds that—
  • (1) a foreign country, in imposing estate, inheritance, legacy, or succession taxes, does not allow to citizens of the United States resident in such foreign country at the time of death a credit similar to the credit allowed under subsection (a),
  • (2) such foreign country, when requested by the United States to do so has not acted to provide such a similar credit in the case of citizens of the United States resident in such foreign country at the time of death, and
  • (3) it is in the public interest to allow the credit under subsection (a) in the case of citizens or subjects of such foreign country only if it allows such a similar credit in the case of citizens of the United States resident in such foreign country at the time of death,

§ 2015. Credit for death taxes on remainders

Where an election is made under section 6163(a) to postpone payment of the tax imposed by section 2001, or 2101, such part of any estate, inheritance, legacy, or succession taxes allowable as a credit under section 2014, as is attributable to a reversionary or remainder interest may be allowed as a credit against the tax attributable to such interest, subject to the limitations on the amount of the credit contained in such sections, if such part is paid, and credit therefor claimed, at any time before the expiration of the time for payment of the tax imposed by section 2001 or 2101 as postponed and extended under section 6163.

§ 2016. Recovery of taxes claimed as credit

If any tax claimed as a credit under section 2014 is recovered from any foreign country, the executor, or any other person or persons recovering such amount, shall give notice of such recovery to the Secretary at such time and in such manner as may be required by regulations prescribed by him, and the Secretary shall (despite the provisions of section 6501) redetermine the amount of the tax under this chapter and the amount, if any, of the tax due on such redetermination, shall be paid by the executor or such person or persons, as the case may be, on notice and demand. No interest shall be assessed or collected on any amount of tax due on any redetermination by the Secretary resulting from a refund to the executor of tax claimed as a credit under section 2014, for any period before the receipt of such refund, except to the extent interest was paid by the foreign country on such refund.

§ 2031. Definition of gross estate

• (a) The value of the gross estate of the decedent shall be determined by including to the extent provided for in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated.
• (b) In the case of stock and securities of a corporation the value of which, by reason of their not being listed on an exchange and by reason of the absence of sales thereof, cannot be determined with reference to bid and asked prices or with reference to sales prices, the value thereof shall be determined by taking into consideration, in addition to all other factors, the value of stock or securities of corporations engaged in the same or a similar line of business which are listed on an exchange.
• (c)
  • (1) If the executor makes the election described in paragraph (6), then, except as otherwise provided in this subsection, there shall be excluded from the gross estate the lesser of—
    • (A) the applicable percentage of the value of land subject to a qualified conservation easement, reduced by the amount of any deduction under section 2055(f) with respect to such land, or
    • (B) $500,000.
  • (2) For purposes of paragraph (1), the term “applicable percentage” means 40 percent reduced (but not below zero) by 2 percentage points for each percentage point (or fraction thereof) by which the value of the qualified conservation easement is less than 30 percent of the value of the land (determined without regard to the value of such easement and reduced by the value of any retained development right (as defined in paragraph (5))). The values taken into account under the preceding sentence shall be such values as of the date of the contribution referred to in paragraph (8)(B).
  • [(3)
  • (4)
    • (A) The exclusion provided in paragraph (1) shall not apply to the extent that the land is debt-financed property.
    • (B) For purposes of this paragraph—
      • (i) The term “debt-financed property” means any property with respect to which there is an acquisition indebtedness (as defined in clause (ii)) on the date of the decedent’s death.
      • (ii) The term “acquisition indebtedness” means, with respect to debt-financed property, the unpaid amount of—
        • (I) the indebtedness incurred by the donor in acquiring such property,
        • (II) the indebtedness incurred before the acquisition of such property if such indebtedness would not have been incurred but for such acquisition,
        • (III) the indebtedness incurred after the acquisition of such property if such indebtedness would not have been incurred but for such acquisition and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition, and
        • (IV) the extension, renewal, or refinancing of an acquisition indebtedness.
  • (5)
    • (A) Paragraph (1) shall not apply to the value of any development right retained by the donor in the conveyance of a qualified conservation easement.
    • (B) If every person in being who has an interest (whether or not in possession) in the land executes an agreement to extinguish permanently some or all of any development rights (as defined in subparagraph (D)) retained by the donor on or before the date for filing the return of the tax imposed by section 2001, then any tax imposed by section 2001 shall be reduced accordingly. Such agreement shall be filed with the return of the tax imposed by section 2001. The agreement shall be in such form as the Secretary shall prescribe.
    • (C) Any failure to implement the agreement described in subparagraph (B) not later than the earlier of—
      • (i) the date which is 2 years after the date of the decedent’s death, or
      • (ii) the date of the sale of such land subject to the qualified conservation easement,
    • (D) For purposes of this paragraph, the term “development right” means any right to use the land subject to the qualified conservation easement in which such right is retained for any commercial purpose which is not subordinate to and directly supportive of the use of such land as a farm for farming purposes (within the meaning of section 2032A(e)(5)).
  • (6) The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return. Such an election, once made, shall be irrevocable.
  • (7) An executor making the election described in paragraph (6) shall, for purposes of calculating the amount of tax imposed by section 2001, include the value of any development right (as defined in paragraph (5)) retained by the donor in the conveyance of such qualified conservation easement. The computation of tax on any retained development right prescribed in this paragraph shall be done in such manner and on such forms as the Secretary shall prescribe.
  • (8) For purposes of this subsection—
    • (A) The term “land subject to a qualified conservation easement” means land—
      • (i) which is located in the United States or any possession of the United States,
      • (ii) which was owned by the decedent or a member of the decedent’s family at all times during the 3-year period ending on the date of the decedent’s death, and
      • (iii) with respect to which a qualified conservation easement has been made by an individual described in subparagraph (C), as of the date of the election described in paragraph (6).
    • (B) The term “qualified conservation easement” means a qualified conservation contribution (as defined in section 170(h)(1)) of a qualified real property interest (as defined in section 170(h)(2)(C)), except that clause (iv) of section 170(h)(4)(A) shall not apply, and the restriction on the use of such interest described in section 170(h)(2)(C) shall include a prohibition on more than a de minimis use for a commercial recreational activity.
    • (C) An individual is described in this subparagraph if such individual is—
      • (i) the decedent,
      • (ii) a member of the decedent’s family,
      • (iii) the executor of the decedent’s estate, or
      • (iv) the trustee of a trust the corpus of which includes the land to be subject to the qualified conservation easement.
    • (D) The term “member of the decedent’s family” means any member of the family (as defined in section 2032A(e)(2)) of the decedent.
  • (9) In any case in which the qualified conservation easement is granted after the date of the decedent’s death and on or before the due date (including extensions) for filing the return of tax imposed by section 2001, the deduction under section 2055(f) with respect to such easement shall be allowed to the estate but only if no charitable deduction is allowed under chapter 1 to any person with respect to the grant of such easement.
  • (10) This section shall apply to an interest in a partnership, corporation, or trust if at least 30 percent of the entity is owned (directly or indirectly) by the decedent, as determined under the rules described in section 2057(e)(3) (as in effect before its repeal).
• (d) For executor’s right to be furnished on request a statement regarding any valuation made by the Secretary within the gross estate, see section 7517.

§ 2032. Alternate valuation

• (a) The value of the gross estate may be determined, if the executor so elects, by valuing all the property included in the gross estate as follows:
  • (1) In the case of property distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent’s death such property shall be valued as of the date of distribution, sale, exchange, or other disposition.
  • (2) In the case of property not distributed, sold, exchanged, or otherwise disposed of, within 6 months after the decedent’s death such property shall be valued as of the date 6 months after the decedent’s death.
  • (3) Any interest or estate which is affected by mere lapse of time shall be included at its value as of the time of death (instead of the later date) with adjustment for any difference in its value as of the later date not due to mere lapse of time.
• (b) No deduction under this chapter of any item shall be allowed if allowance for such items is in effect given by the alternate valuation provided by this section. Wherever in any other subsection or section of this chapter reference is made to the value of property at the time of the decedent’s death, such reference shall be deemed to refer to the value of such property used in determining the value of the gross estate. In case of an election made by the executor under this section, then—
  • (1) for purposes of the charitable deduction under section 2055 or 2106(a)(2), any bequest, legacy, devise, or transfer enumerated therein, and
  • (2) for the purpose of the marital deduction under section 2056, any interest in property passing to the surviving spouse,
• (c) No election may be made under this section with respect to an estate unless such election will decrease—
  • (1) the value of the gross estate, and
  • (2) the sum of the tax imposed by this chapter and the tax imposed by chapter 13 with respect to property includible in the decedent’s gross estate (reduced by credits allowable against such taxes).
• (d)
  • (1) The election provided for in this section shall be made by the executor on the return of the tax imposed by this chapter. Such election, once made, shall be irrevocable.
  • (2) No election may be made under this section if such return is filed more than 1 year after the time prescribed by law (including extensions) for filing such return.

§ 2032A. Valuation of certain farm, etc., real property

• (a)
  • (1) If—
    • (A) the decedent was (at the time of his death) a citizen or resident of the United States, and
    • (B) the executor elects the application of this section and files the agreement referred to in subsection (d)(2),
  • (2) The aggregate decrease in the value of qualified real property taken into account for purposes of this chapter which results from the application of paragraph (1) with respect to any decedent shall not exceed $750,000.
  • (3) In the case of estates of decedents dying in a calendar year after 1998, the $750,000 amount contained in paragraph (2) shall be increased by an amount equal to—
    • (A) $750,000, multiplied by
    • (B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting “calendar year 1997” for “calendar year 2016” in subparagraph (A)(ii) thereof.
• (b)
  • (1) For purposes of this section, the term “qualified real property” means real property located in the United States which was acquired from or passed from the decedent to a qualified heir of the decedent and which, on the date of the decedent’s death, was being used for a qualified use by the decedent or a member of the decedent’s family, but only if—
    • (A) 50 percent or more of the adjusted value of the gross estate consists of the adjusted value of real or personal property which—
      • (i) on the date of the decedent’s death, was being used for a qualified use by the decedent or a member of the decedent’s family, and
      • (ii) was acquired from or passed from the decedent to a qualified heir of the decedent.
    • (B) 25 percent or more of the adjusted value of the gross estate consists of the adjusted value of real property which meets the requirements of subparagraphs (A)(ii) and (C),
    • (C) during the 8-year period ending on the date of the decedent’s death there have been periods aggregating 5 years or more during which—
      • (i) such real property was owned by the decedent or a member of the decedent’s family and used for a qualified use by the decedent or a member of the decedent’s family, and
      • (ii) there was material participation by the decedent or a member of the decedent’s family in the operation of the farm or other business, and
    • (D) such real property is designated in the agreement referred to in subsection (d)(2).
  • (2) For purposes of this section, the term “qualified use” means the devotion of the property to any of the following:
    • (A) use as a farm for farming purposes, or
    • (B) use in a trade or business other than the trade or business of farming.
  • (3) For purposes of paragraph (1), the term “adjusted value” means—
    • (A) in the case of the gross estate, the value of the gross estate for purposes of this chapter (determined without regard to this section), reduced by any amounts allowable as a deduction under paragraph (4) of section 2053(a), or
    • (B) in the case of any real or personal property, the value of such property for purposes of this chapter (determined without regard to this section), reduced by any amounts allowable as a deduction in respect of such property under paragraph (4) of section 2053(a).
  • (4)
    • (A) If, on the date of the decedent’s death, the requirements of paragraph (1)(C)(ii) with respect to the decedent for any property are not met, and the decedent—
      • (i) was receiving old-age benefits under title II of the Social Security Act for a continuous period ending on such date, or
      • (ii) was disabled for a continuous period ending on such date,
    • (B) For purposes of subparagraph (A), an individual shall be disabled if such individual has a mental or physical impairment which renders him unable to materially participate in the operation of the farm or other business.
    • (C) For purposes of subsection (c)(6)(B)(i), if the requirements of paragraph (1)(C)(ii) are met with respect to any decedent by reason of subparagraph (A), the period ending on the date on which the continuous period taken into account under subparagraph (A) began shall be treated as the period immediately before the decedent’s death.
  • (5)
    • (A) If property is qualified real property with respect to a decedent (hereinafter in this paragraph referred to as the “first decedent”) and such property was acquired from or passed from the first decedent to the surviving spouse of the first decedent, for purposes of applying this subsection and subsection (c) in the case of the estate of such surviving spouse, active management of the farm or other business by the surviving spouse shall be treated as material participation by such surviving spouse in the operation of such farm or business.
    • (B) For the purposes of subparagraph (A), the determination of whether property is qualified real property with respect to the first decedent shall be made without regard to subparagraph (D) of paragraph (1) and without regard to whether an election under this section was made.
    • (C) In any case in which to do so will enable the requirements of paragraph (1)(C)(ii) to be met with respect to the surviving spouse, this subsection and subsection (c) shall be applied by taking into account any application of paragraph (4).
• (c)
  • (1) If, within 10 years after the decedent’s death and before the death of the qualified heir—
    • (A) the qualified heir disposes of any interest in qualified real property (other than by a disposition to a member of his family), or
    • (B) the qualified heir ceases to use for the qualified use the qualified real property which was acquired (or passed) from the decedent,
  • (2)
    • (A) The amount of the additional tax imposed by paragraph (1) with respect to any interest shall be the amount equal to the lesser of—
      • (i) the adjusted tax difference attributable to such interest, or
      • (ii) the excess of the amount realized with respect to the interest (or, in any case other than a sale or exchange at arm’s length, the fair market value of the interest) over the value of the interest determined under subsection (a).
    • (B) For purposes of subparagraph (A), the adjusted tax difference attributable to an interest is the amount which bears the same ratio to the adjusted tax difference with respect to the estate (determined under subparagraph (C)) as—
      • (i) the excess of the value of such interest for purposes of this chapter (determined without regard to subsection (a)) over the value of such interest determined under subsection (a), bears to
      • (ii) a similar excess determined for all qualified real property.
    • (C) For purposes of subparagraph (B), the term “adjusted tax difference with respect to the estate” means the excess of what would have been the estate tax liability but for subsection (a) over the estate tax liability. For purposes of this subparagraph, the term “estate tax liability” means the tax imposed by section 2001 reduced by the credits allowable against such tax.
    • (D) For purposes of this paragraph, where the qualified heir disposes of a portion of the interest acquired by (or passing to) such heir (or a predecessor qualified heir) or there is a cessation of use of such a portion—
      • (i) the value determined under subsection (a) taken into account under subparagraph (A)(ii) with respect to such portion shall be its pro rata share of such value of such interest, and
      • (ii) the adjusted tax difference attributable to the interest taken into account with respect to the transaction involving the second or any succeeding portion shall be reduced by the amount of the tax imposed by this subsection with respect to all prior transactions involving portions of such interest.
    • (E) In the case of qualified woodland to which an election under subsection (e)(13)(A) applies, if the qualified heir disposes of (or severs) any standing timber on such qualified woodland—
      • (i) such disposition (or severance) shall be treated as a disposition of a portion of the interest of the qualified heir in such property, and
      • (ii) the amount of the additional tax imposed by paragraph (1) with respect to such disposition shall be an amount equal to the lesser of—
        • (I) the amount realized on such disposition (or, in any case other than a sale or exchange at arm’s length, the fair market value of the portion of the interest disposed or severed), or
        • (II) the amount of additional tax determined under this paragraph (without regard to this subparagraph) if the entire interest of the qualified heir in the qualified woodland had been disposed of, less the sum of the amount of the additional tax imposed with respect to all prior transactions involving such woodland to which this subparagraph applied.
  • (3) In the case of an interest acquired from (or passing from) any decedent, if subparagraph (A) or (B) of paragraph (1) applies to any portion of an interest, subparagraph (B) or (A), as the case may be, of paragraph (1) shall not apply with respect to the same portion of such interest.
  • (4) The additional tax imposed by this subsection shall become due and payable on the day which is 6 months after the date of the disposition or cessation referred to in paragraph (1).
  • (5) The qualified heir shall be personally liable for the additional tax imposed by this subsection with respect to his interest unless the heir has furnished bond which meets the requirements of subsection (e)(11).
  • (6) For purposes of paragraph (1)(B), real property shall cease to be used for the qualified use if—
    • (A) such property ceases to be used for the qualified use set forth in subparagraph (A) or (B) of subsection (b)(2) under which the property qualified under subsection (b), or
    • (B) during any period of 8 years ending after the date of the decedent’s death and before the date of the death of the qualified heir, there had been periods aggregating more than 3 years during which—
      • (i) in the case of periods during which the property was held by the decedent, there was no material participation by the decedent or any member of his family in the operation of the farm or other business, and
      • (ii) in the case of periods during which the property was held by any qualified heir, there was no material participation by such qualified heir or any member of his family in the operation of the farm or other business.
  • (7)
    • (A) If the date on which the qualified heir begins to use the qualified real property (hereinafter in this subparagraph referred to as the commencement date) is before the date 2 years after the decedent’s death—
      • (i) no tax shall be imposed under paragraph (1) by reason of the failure by the qualified heir to so use such property before the commencement date, and
      • (ii) the 10-year period under paragraph (1) shall be extended by the period after the decedent’s death and before the commencement date.
    • (B) For purposes of paragraph (6)(B)(ii), the active management of a farm or other business by—
      • (i) an eligible qualified heir, or
      • (ii) a fiduciary of an eligible qualified heir described in clause (ii) or (iii) of subparagraph (C),
    • (C) For purposes of this paragraph, the term “eligible qualified heir” means a qualified heir who—
      • (i) is the surviving spouse of the decedent,
      • (ii) has not attained the age of 21,
      • (iii) is disabled (within the meaning of subsection (b)(4)(B)), or
      • (iv) is a student.
    • (D) For purposes of subparagraph (C), an individual shall be treated as a student with respect to periods during any calendar year if (and only if) such individual is a student (within the meaning of section 152(f)(2)) for such calendar year.
    • (E) For purposes of this subsection, a surviving spouse or lineal descendant of the decedent shall not be treated as failing to use qualified real property in a qualified use solely because such spouse or descendant rents such property to a member of the family of such spouse or descendant on a net cash basis. For purposes of the preceding sentence, a legally adopted child of an individual shall be treated as the child of such individual by blood.
  • (8) A qualified conservation contribution (as defined in section 170(h)) by gift or otherwise shall not be deemed a disposition under subsection (c)(1)(A).
• (d)
  • (1) The election under this section shall be made on the return of the tax imposed by section 2001. Such election shall be made in such manner as the Secretary shall by regulations prescribe. Such an election, once made, shall be irrevocable.
  • (2) The agreement referred to in this paragraph is a written agreement signed by each person in being who has an interest (whether or not in possession) in any property designated in such agreement consenting to the application of subsection (c) with respect to such property.
  • (3) The Secretary shall prescribe procedures which provide that in any case in which the executor makes an election under paragraph (1) (and submits the agreement referred to in paragraph (2)) within the time prescribed therefor, but—
    • (A) the notice of election, as filed, does not contain all required information, or
    • (B) signatures of 1 or more persons required to enter into the agreement described in paragraph (2) are not included on the agreement as filed, or the agreement does not contain all required information,
• (e) For purposes of this section—
  • (1) The term “qualified heir” means, with respect to any property, a member of the decedent’s family who acquired such property (or to whom such property passed) from the decedent. If a qualified heir disposes of any interest in qualified real property to any member of his family, such member shall thereafter be treated as the qualified heir with respect to such interest.
  • (2) The term “member of the family” means, with respect to any individual, only—
    • (A) an ancestor of such individual,
    • (B) the spouse of such individual,
    • (C) a lineal descendant of such individual, of such individual’s spouse, or of a parent of such individual, or
    • (D) the spouse of any lineal descendant described in subparagraph (C).
  • (3) In the case of real property which meets the requirements of subparagraph (C) of subsection (b)(1), residential buildings and related improvements on such real property occupied on a regular basis by the owner or lessee of such real property or by persons employed by such owner or lessee for the purpose of operating or maintaining such real property, and roads, buildings, and other structures and improvements functionally related to the qualified use shall be treated as real property devoted to the qualified use.
  • (4) The term “farm” includes stock, dairy, poultry, fruit, furbearing animal, and truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards and woodlands.
  • (5) The term “farming purposes” means—
    • (A) cultivating the soil or raising or harvesting any agricultural or horticultural commodity (including the raising, shearing, feeding, caring for, training, and management of animals) on a farm;
    • (B) handling, drying, packing, grading, or storing on a farm any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant, or operator of the farm regularly produces more than one-half of the commodity so treated; and
    • (C)
      • (i) the planting, cultivating, caring for, or cutting of trees, or
      • (ii) the preparation (other than milling) of trees for market.
  • (6) Material participation shall be determined in a manner similar to the manner used for purposes of paragraph (1) of section 1402(a) (relating to net earnings from self-employment).
  • (7)
    • (A) Except as provided in subparagraph (B), the value of a farm for farming purposes shall be determined by dividing—
      • (i) the excess of the average annual gross cash rental for comparable land used for farming purposes and located in the locality of such farm over the average annual State and local real estate taxes for such comparable land, by
      • (ii) the average annual effective interest rate for all new Federal Land Bank loans.
    • (B)
      • (i) If there is no comparable land from which the average annual gross cash rental may be determined but there is comparable land from which the average net share rental may be determined, subparagraph (A)(i) shall be applied by substituting “average annual net share rental” for “average annual gross cash rental”.
      • (ii) For purposes of this paragraph, the term “net share rental” means the excess of—
        • (I) the value of the produce received by the lessor of the land on which such produce is grown, over
        • (II) the cash operating expenses of growing such produce which, under the lease, are paid by the lessor.
    • (C) The formula provided by subparagraph (A) shall not be used—
      • (i) where it is established that there is no comparable land from which the average annual gross cash rental may be determined, or
      • (ii) where the executor elects to have the value of the farm for farming purposes determined and that there is no comparable land from which the average net share rental may be determined under paragraph (8).
  • (8) In any case to which paragraph (7)(A) does not apply, the following factors shall apply in determining the value of any qualified real property:
    • (A) The capitalization of income which the property can be expected to yield for farming or closely held business purposes over a reasonable period of time under prudent management using traditional cropping patterns for the area, taking into account soil capacity, terrain configuration, and similar factors,
    • (B) The capitalization of the fair rental value of the land for farm land or closely held business purposes,
    • (C) Assessed land values in a State which provides a differential or use value assessment law for farmland or closely held business,
    • (D) Comparable sales of other farm or closely held business land in the same geographical area far enough removed from a metropolitan or resort area so that nonagricultural use is not a significant factor in the sales price, and
    • (E) Any other factor which fairly values the farm or closely held business value of the property.
  • (9) Property shall be considered to have been acquired from or to have passed from the decedent if—
    • (A) such property is so considered under section 1014(b) (relating to basis of property acquired from a decedent),
    • (B) such property is acquired by any person from the estate, or
    • (C) such property is acquired by any person from a trust (to the extent such property is includible in the gross estate of the decedent).
  • (10) If the decedent and his surviving spouse at any time held qualified real property as community property, the interest of the surviving spouse in such property shall be taken into account under this section to the extent necessary to provide a result under this section with respect to such property which is consistent with the result which would have obtained under this section if such property had not been community property.
  • (11) If the qualified heir makes written application to the Secretary for determination of the maximum amount of the additional tax which may be imposed by subsection (c) with respect to the qualified heir’s interest, the Secretary (as soon as possible, and in any event within 1 year after the making of such application) shall notify the heir of such maximum amount. The qualified heir, on furnishing a bond in such amount and for such period as may be required, shall be discharged from personal liability for any additional tax imposed by subsection (c) and shall be entitled to a receipt or writing showing such discharge.
  • (12) The term “active management” means the making of the management decisions of a business (other than the daily operating decisions).
  • (13)
    • (A) In the case of any qualified woodland with respect to which the executor elects to have this subparagraph apply, trees growing on such woodland shall not be treated as a crop.
    • (B) The term “qualified woodland” means any real property which—
      • (i) is used in timber operations, and
      • (ii) is an identifiable area of land such as an acre or other area for which records are normally maintained in conducting timber operations.
    • (C) The term “timber operations” means—
      • (i) the planting, cultivating, caring for, or cutting of trees, or
      • (ii) the preparation (other than milling) of trees for market.
    • (D) An election under subparagraph (A) shall be made on the return of the tax imposed by section 2001. Such election shall be made in such manner as the Secretary shall by regulations prescribe. Such an election, once made, shall be irrevocable.
  • (14)
    • (A) In the case of any qualified replacement property, any period during which there was ownership, qualified use, or material participation with respect to the replaced property by the decedent or any member of his family shall be treated as a period during which there was such ownership, use, or material participation (as the case may be) with respect to the qualified replacement property.
    • (B) Subparagraph (A) shall not apply to the extent that the fair market value of the qualified replacement property (as of the date of its acquisition) exceeds the fair market value of the replaced property (as of the date of its disposition).
    • (C) For purposes of this paragraph—
      • (i) The term “qualified replacement property” means any real property which is—
        • (I) acquired in an exchange which qualifies under section 1031, or
        • (II) the acquisition of which results in the nonrecognition of gain under section 1033.
      • (ii) The term “replaced property” means—
        • (I) the property transferred in the exchange which qualifies under section 1031, or
        • (II) the property compulsorily or involuntarily converted (within the meaning of section 1033).
• (f) If qualified real property is disposed of or ceases to be used for a qualified use, then—
  • (1) the statutory period for the assessment of any additional tax under subsection (c) attributable to such disposition or cessation shall not expire before the expiration of 3 years from the date the Secretary is notified (in such manner as the Secretary may by regulations prescribe) of such disposition or cessation (or if later in the case of an involuntary conversion or exchange to which subsection (h) or (i) applies, 3 years from the date the Secretary is notified of the replacement of the converted property or of an intention not to replace or of the exchange of property), and
  • (2) such additional tax may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
• (g) The Secretary shall prescribe regulations setting forth the application of this section and section 6324B in the case of an interest in a partnership, corporation, or trust which, with respect to the decedent, is an interest in a closely held business (within the meaning of paragraph (1) of section 6166(b)). For purposes of the preceding sentence, an interest in a discretionary trust all the beneficiaries of which are qualified heirs shall be treated as a present interest.
• (h)
  • (1)
    • (A) If there is an involuntary conversion of an interest in qualified real property—
      • (i) no tax shall be imposed by subsection (c) on such conversion if the cost of the qualified replacement property equals or exceeds the amount realized on such conversion, or
      • (ii) if clause (i) does not apply, the amount of the tax imposed by subsection (c) on such conversion shall be the amount determined under subparagraph (B).
    • (B) The amount determined under this subparagraph with respect to any involuntary conversion is the amount of the tax which (but for this subsection) would have been imposed on such conversion reduced by an amount which—
      • (i) bears the same ratio to such tax, as
      • (ii) the cost of the qualified replacement property bears to the amount realized on the conversion.
  • (2) For purposes of subsection (c)—
    • (A) any qualified replacement property shall be treated in the same manner as if it were a portion of the interest in qualified real property which was involuntarily converted; except that with respect to such qualified replacement property the 10-year period under paragraph (1) of subsection (c) shall be extended by any period, beyond the 2-year period referred to in section 1033(a)(2)(B)(i), during which the qualified heir was allowed to replace the qualified real property,
    • (B) any tax imposed by subsection (c) on the involuntary conversion shall be treated as a tax imposed on a partial disposition, and
    • (C) paragraph (6) of subsection (c) shall be applied—
      • (i) by not taking into account periods after the involuntary conversion and before the acquisition of the qualified replacement property, and
      • (ii) by treating material participation with respect to the converted property as material participation with respect to the qualified replacement property.
  • (3) For purposes of this subsection—
    • (A) The term “involuntary conversion” means a compulsory or involuntary conversion within the meaning of section 1033.
    • (B) The term “qualified replacement property” means—
      • (i) in the case of an involuntary conversion described in section 1033(a)(1), any real property into which the qualified real property is converted, or
      • (ii) in the case of an involuntary conversion described in section 1033(a)(2), any real property purchased by the qualified heir during the period specified in section 1033(a)(2)(B) for purposes of replacing the qualified real property.
  • (4) The rules of the last sentence of section 1033(a)(2)(A) shall apply for purposes of paragraph (3)(B)(ii).
• (i)
  • (1)
    • (A) If an interest in qualified real property is exchanged solely for an interest in qualified exchange property in a transaction which qualifies under section 1031, no tax shall be imposed by subsection (c) by reason of such exchange.
    • (B) If an interest in qualified real property is exchanged for an interest in qualified exchange property and other property in a transaction which qualifies under section 1031, the amount of the tax imposed by subsection (c) by reason of such exchange shall be the amount of tax which (but for this subparagraph) would have been imposed on such exchange under subsection (c)(1), reduced by an amount which—
      • (i) bears the same ratio to such tax, as
      • (ii) the fair market value of the qualified exchange property bears to the fair market value of the qualified real property exchanged.
  • (2) For purposes of subsection (c)—
    • (A) any interest in qualified exchange property shall be treated in the same manner as if it were a portion of the interest in qualified real property which was exchanged,
    • (B) any tax imposed by subsection (c) by reason of the exchange shall be treated as a tax imposed on a partial disposition, and
    • (C) paragraph (6) of subsection (c) shall be applied by treating material participation with respect to the exchanged property as material participation with respect to the qualified exchange property.
  • (3) For purposes of this subsection, the term “qualified exchange property” means real property which is to be used for the qualified use set forth in subparagraph (A) or (B) of subsection (b)(2) under which the real property exchanged therefor originally qualified under subsection (a).

§ 2033. Property in which the decedent had an interest

The value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death.

§ 2034. Dower or curtesy interests

The value of the gross estate shall include the value of all property to the extent of any interest therein of the surviving spouse, existing at the time of the decedent’s death as dower or curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy.

§ 2035. Adjustments for certain gifts made within 3 years of decedent’s death

• (a) If—
  • (1) the decedent made a transfer (by trust or otherwise) of an interest in any property, or relinquished a power with respect to any property, during the 3-year period ending on the date of the decedent’s death, and
  • (2) the value of such property (or an interest therein) would have been included in the decedent’s gross estate under section 2036, 2037, 2038, or 2042 if such transferred interest or relinquished power had been retained by the decedent on the date of his death,
• (b) The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse during the 3-year period ending on the date of the decedent’s death.
• (c)
  • (1) For purposes of—
    • (A) section 303(b) (relating to distributions in redemption of stock to pay death taxes),
    • (B) section 2032A (relating to special valuation of certain farms, etc., real property), and
    • (C) subchapter C of chapter 64 (relating to lien for taxes),
  • (2) An estate shall be treated as meeting the 35 percent of adjusted gross estate requirement of section 6166(a)(1) only if the estate meets such requirement both with and without the application of subsection (a).
  • (3) Paragraph (1) shall not apply to any transfer (other than a transfer with respect to a life insurance policy) made during a calendar year to any donee if the decedent was not required by section 6019 (other than by reason of section 6019(2)) to file any gift tax return for such year with respect to transfers to such donee.
• (d) Subsection (a) and paragraph (1) of subsection (c) shall not apply to any bona fide sale for an adequate and full consideration in money or money’s worth.
• (e) For purposes of this section and section 2038, any transfer from any portion of a trust during any period that such portion was treated under section 676 as owned by the decedent by reason of a power in the grantor (determined without regard to section 672(e)) shall be treated as a transfer made directly by the decedent.

§ 2036. Transfers with retained life estate

• (a) The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death—
  • (1) the possession or enjoyment of, or the right to the income from, the property, or
  • (2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom.
• (b)
  • (1) For purposes of subsection (a)(1), the retention of the right to vote (directly or indirectly) shares of stock of a controlled corporation shall be considered to be a retention of the enjoyment of transferred property.
  • (2) For purposes of paragraph (1), a corporation shall be treated as a controlled corporation if, at any time after the transfer of the property and during the 3-year period ending on the date of the decedent’s death, the decedent owned (with the application of section 318), or had the right (either alone or in conjunction with any person) to vote, stock possessing at least 20 percent of the total combined voting power of all classes of stock.
  • (3) For purposes of applying section 2035 with respect to paragraph (1), the relinquishment or cessation of voting rights shall be treated as a transfer of property made by the decedent.
• (c) This section shall not apply to a transfer made before March 4, 1931 ; nor to a transfer made after March 3, 1931 , and before June 7, 1932 , unless the property transferred would have been includible in the decedent’s gross estate by reason of the amendatory language of the joint resolution of March 3, 1931 ( 46 Stat. 1516 ).

§ 2037. Transfers taking effect at death

• (a) The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time after September 7, 1916 , made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, if—
  • (1) possession or enjoyment of the property can, through ownership of such interest, be obtained only by surviving the decedent, and
  • (2) the decedent has retained a reversionary interest in the property (but in the case of a transfer made before October 8, 1949 , only if such reversionary interest arose by the express terms of the instrument of transfer), and the value of such reversionary interest immediately before the death of the decedent exceeds 5 percent of the value of such property.
• (b) For purposes of this section, the term “reversionary interest” includes a possibility that property transferred by the decedent—
  • (1) may return to him or his estate, or
  • (2) may be subject to a power of disposition by him,

§ 2038. Revocable transfers

• (a) The value of the gross estate shall include the value of all property—
  • (1) To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power (in whatever capacity exercisable) by the decedent alone or by the decedent in conjunction with any other person (without regard to when or from what source the decedent acquired such power), to alter, amend, revoke, or terminate, or where any such power is relinquished during the 3 year period ending on the date of the decedent’s death.
  • (2) To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power during the 3 year period ending on the date of the decedent’s death. Except in the case of transfers made after June 22, 1936 , no interest of the decedent of which he has made a transfer shall be included in the gross estate under paragraph (1) unless it is includible under this paragraph.
• (b) For purposes of this section, the power to alter, amend, revoke, or terminate shall be considered to exist on the date of the decedent’s death even though the exercise of the power is subject to a precedent giving of notice or even though the alteration, amendment, revocation, or termination takes effect only on the expiration of a stated period after the exercise of the power, whether or not on or before the date of the decedent’s death notice has been given or the power has been exercised. In such cases proper adjustment shall be made representing the interests which would have been excluded from the power if the decedent had lived, and for such purpose, if the notice has not been given or the power has not been exercised on or before the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of his death.

§ 2039. Annuities

• (a) The gross estate shall include the value of an annuity or other payment receivable by any beneficiary by reason of surviving the decedent under any form of contract or agreement entered into after March 3, 1931 (other than as insurance under policies on the life of the decedent), if, under such contract or agreement, an annuity or other payment was payable to the decedent, or the decedent possessed the right to receive such annuity or payment, either alone or in conjunction with another for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death.
• (b) Subsection (a) shall apply to only such part of the value of the annuity or other payment receivable under such contract or agreement as is proportionate to that part of the purchase price therefor contributed by the decedent. For purposes of this section, any contribution by the decedent’s employer or former employer to the purchase price of such contract or agreement (whether or not to an employee’s trust or fund forming part of a pension, annuity, retirement, bonus or profit sharing plan) shall be considered to be contributed by the decedent if made by reason of his employment.

§ 2040. Joint interests

• (a) The value of the gross estate shall include the value of all property to the extent of the interest therein held as joint tenants with right of survivorship by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money’s worth: Provided , That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for less than an adequate and full consideration in money or money’s worth, there shall be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: Provided further , That where any property has been acquired by gift, bequest, devise, or inheritance, as a tenancy by the entirety by the decedent and spouse, then to the extent of one-half of the value thereof, or, where so acquired by the decedent and any other person as joint tenants with right of survivorship and their interests are not otherwise specified or fixed by law, then to the extent of the value of a fractional part to be determined by dividing the value of the property by the number of joint tenants with right of survivorship.
• (b)
  • (1) Notwithstanding subsection (a), in the case of any qualified joint interest, the value included in the gross estate with respect to such interest by reason of this section is one-half of the value of such qualified joint interest.
  • (2) For purposes of paragraph (1), the term “qualified joint interest” means any interest in property held by the decedent and the decedent’s spouse as—
    • (A) tenants by the entirety, or
    • (B) joint tenants with right of survivorship, but only if the decedent and the spouse of the decedent are the only joint tenants.

§ 2041. Powers of appointment

• (a) The value of the gross estate shall include the value of all property—
  • (1) To the extent of any property with respect to which a general power of appointment created on or before October 21, 1942 , is exercised by the decedent—
    • (A) by will, or
    • (B) by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent’s gross estate under sections 2035 to 2038, inclusive;
      • (i) such partial release occurred before November 1, 1951 , or
      • (ii) the donee of such power was under a legal disability to release such power on October 21, 1942 , and such partial release occurred not later than 6 months after the termination of such legal disability.
  • (2) To the extent of any property with respect to which the decedent has at the time of his death a general power of appointment created after October 21, 1942 , or with respect to which the decedent has at any time exercised or released such a power of appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent, such property would be includible in the decedent’s gross estate under sections 2035 to 2038, inclusive. For purposes of this paragraph (2), the power of appointment shall be considered to exist on the date of the decedent’s death even though the exercise of the power is subject to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of a stated period after its exercise, whether or not on or before the date of the decedent’s death notice has been given or the power has been exercised.
  • (3) To the extent of any property with respect to which the decedent—
    • (A) by will, or
    • (B) by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent’s gross estate under section 2035, 2036, or 2037,
• (b) For purposes of subsection (a)—
  • (1) The term “general power of appointment” means a power which is exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate; except that—
    • (A) A power to consume, invade, or appropriate property for the benefit of the decedent which is limited by an ascertainable standard relating to the health, education, support, or maintenance of the decedent shall not be deemed a general power of appointment.
    • (B) A power of appointment created on or before October 21, 1942 , which is exercisable by the decedent only in conjunction with another person shall not be deemed a general power of appointment.
    • (C) In the case of a power of appointment created after October 21, 1942 , which is exercisable by the decedent only in conjunction with another person—
      • (i) If the power is not exercisable by the decedent except in conjunction with the creator of the power—such power shall not be deemed a general power of appointment.
      • (ii) If the power is not exercisable by the decedent except in conjunction with a person having a substantial interest in the property, subject to the power, which is adverse to exercise of the power in favor of the decedent—such power shall not be deemed a general power of appointment. For the purposes of this clause a person who, after the death of the decedent, may be possessed of a power of appointment (with respect to the property subject to the decedent’s power) which he may exercise in his own favor shall be deemed as having an interest in the property and such interest shall be deemed adverse to such exercise of the decedent’s power.
      • (iii) If (after the application of clauses (i) and (ii)) the power is a general power of appointment and is exercisable in favor of such other person—such power shall be deemed a general power of appointment only in respect of a fractional part of the property subject to such power, such part to be determined by dividing the value of such property by the number of such persons (including the decedent) in favor of whom such power is exercisable.
  • (2) The lapse of a power of appointment created after October 21, 1942 , during the life of the individual possessing the power shall be considered a release of such power. The preceding sentence shall apply with respect to the lapse of powers during any calendar year only to the extent that the property, which could have been appointed by exercise of such lapsed powers, exceeded in value, at the time of such lapse, the greater of the following amounts:
    • (A) $5,000, or
    • (B) 5 percent of the aggregate value, at the time of such lapse, of the assets out of which, or the proceeds of which, the exercise of the lapsed powers could have been satisfied.
  • (3) For purposes of this section, a power of appointment created by a will executed on or before October 21, 1942 , shall be considered a power created on or before such date if the person executing such will dies before July 1, 1949 , without having republished such will, by codicil or otherwise, after October 21, 1942 .

§ 2042. Proceeds of life insurance

The value of the gross estate shall include the value of all property—

• (1) To the extent of the amount receivable by the executor as insurance under policies on the life of the decedent.
• (2) To the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in conjunction with any other person. For purposes of the preceding sentence, the term “incident of ownership” includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversionary interest exceeded 5 percent of the value of the policy immediately before the death of the decedent. As used in this paragraph, the term “reversionary interest” includes a possibility that the policy, or the proceeds of the policy, may return to the decedent or his estate, or may be subject to a power of disposition by him. The value of a reversionary interest at any time shall be determined (without regard to the fact of the decedent’s death) by usual methods of valuation, including the use of tables of mortality and actuarial principles, pursuant to regulations prescribed by the Secretary. In determining the value of a possibility that the policy or proceeds thereof may be subject to a power of disposition by the decedent, such possibility shall be valued as if it were a possibility that such policy or proceeds may return to the decedent or his estate.

§ 2043. Transfers for insufficient consideration

• (a) If any one of the transfers, trusts, interests, rights, or powers enumerated and described in sections 2035 to 2038, inclusive, and section 2041 is made, created, exercised, or relinquished for a consideration in money or money’s worth, but is not a bona fide sale for an adequate and full consideration in money or money’s worth, there shall be included in the gross estate only the excess of the fair market value at the time of death of the property otherwise to be included on account of such transaction, over the value of the consideration received therefor by the decedent.
• (b)
  • (1) For purposes of this chapter, a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent’s property or estate, shall not be considered to any extent a consideration “in money or money’s worth”.
  • (2) For purposes of section 2053 (relating to expenses, indebtedness, and taxes), a transfer of property which satisfies the requirements of paragraph (1) of section 2516 (relating to certain property settlements) shall be considered to be made for an adequate and full consideration in money or money’s worth.

§ 2044. Certain property for which marital deduction was previously allowed

• (a) The value of the gross estate shall include the value of any property to which this section applies in which the decedent had a qualifying income interest for life.
• (b) This section applies to any property if—
  • (1) a deduction was allowed with respect to the transfer of such property to the decedent—
    • (A) under section 2056 by reason of subsection (b)(7) thereof, or
    • (B) under section 2523 by reason of subsection (f) thereof, and
  • (2) section 2519 (relating to dispositions of certain life estates) did not apply with respect to a disposition by the decedent of part or all of such property.
• (c) For purposes of this chapter and chapter 13, property includible in the gross estate of the decedent under subsection (a) shall be treated as property passing from the decedent.

§ 2045. Prior interests

Except as otherwise specifically provided by law, sections 2034 to 2042, inclusive, shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whenever made, created, arising, existing, exercised, or relinquished.

§ 2046. Disclaimers

For provisions relating to the effect of a qualified disclaimer for purposes of this chapter, see section 2518.

§ 2051. Definition of taxable estate

For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the deductions provided for in this part.

§ 2053. Expenses, indebtedness, and taxes

• (a) For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate such amounts—
  • (1) for funeral expenses,
  • (2) for administration expenses,
  • (3) for claims against the estate, and
  • (4) for unpaid mortgages on, or any indebtedness in respect of, property where the value of the decedent’s interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate,
• (b) Subject to the limitations in paragraph (1) of subsection (c), there shall be deducted in determining the taxable estate amounts representing expenses incurred in administering property not subject to claims which is included in the gross estate to the same extent such amounts would be allowable as a deduction under subsection (a) if such property were subject to claims, and such amounts are paid before the expiration of the period of limitation for assessment provided in section 6501.
• (c)
  • (1)
    • (A) The deduction allowed by this section in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded on a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money’s worth; except that in any case in which any such claim is founded on a promise or agreement of the decedent to make a contribution or gift to or for the use of any donee described in section 2055 for the purposes specified therein, the deduction for such claims shall not be so limited, but shall be limited to the extent that it would be allowable as a deduction under section 2055 if such promise or agreement constituted a bequest.
    • (B) Any income taxes on income received after the death of the decedent, or property taxes not accrued before his death, or any estate, succession, legacy, or inheritance taxes, shall not be deductible under this section.
    • (C) No deduction shall be allowed under this section for a claim against the estate by a remainderman relating to any property described in section 2044.
    • (D) No deduction shall be allowed under this section for any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166.
  • (2) In the case of the amounts described in subsection (a), there shall be disallowed the amount by which the deductions specified therein exceed the value, at the time of the decedent’s death, of property subject to claims, except to the extent that such deductions represent amounts paid before the date prescribed for the filing of the estate tax return. For purposes of this section, the term “property subject to claims” means property includible in the gross estate of the decedent which, or the avails of which, would under the applicable law, bear the burden of the payment of such deductions in the final adjustment and settlement of the estate, except that the value of the property shall be reduced by the amount of the deduction under section 2054 attributable to such property.
• (d)
  • (1) Notwithstanding the provisions of subsection (c)(1)(B), for purposes of the tax imposed by section 2001, the value of the taxable estate may be determined, if the executor so elects before the expiration of the period of limitation for assessment provided in section 6501, by deducting from the value of the gross estate the amount (as determined in accordance with regulations prescribed by the Secretary) of any estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country, in respect of any property situated within such foreign country and included in the gross estate of a citizen or resident of the United States, upon a transfer by the decedent for public, charitable, or religious uses described in section 2055. The determination under this paragraph of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States. Any election under this paragraph shall be exercised in accordance with regulations prescribed by the Secretary.
  • (2) No deduction shall be allowed under paragraph (1) for a foreign death tax specified therein unless the decrease in the tax imposed by section 2001 which results from the deduction provided in paragraph (1) will inure solely for the benefit of the public, charitable, or religious transferees described in section 2055 or section 2106(a)(2). In any case where the tax imposed by section 2001 is equitably apportioned among all the transferees of property included in the gross estate, including those described in sections 2055 and 2106(a)(2) (taking into account any exemptions, credits, or deductions allowed by this chapter), in determining such decrease, there shall be disregarded any decrease in the Federal estate tax which any transferees other than those described in sections 2055 and 2106(a)(2) are required to pay.
  • (3)
    • (A) An election under this subsection shall be deemed a waiver of the right to claim a credit, against the Federal estate tax, under a death tax convention with any foreign country for any tax or portion thereof in respect of which a deduction is taken under this subsection.
    • (B) See section 2014(f) for the effect of a deduction taken under this paragraph on the credit for foreign death taxes.
• (e) For provisions treating certain relinquishments of marital rights as consideration in money or money’s worth, see section 2043(b)(2).

§ 2054. Losses

For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate losses incurred during the settlement of estates arising from fires, storms, shipwrecks, or other casualties, or from theft, when such losses are not compensated for by insurance or otherwise.

§ 2055. Transfers for public, charitable, and religious uses

• (a) For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of all bequests, legacies, devises, or transfers—
  • (1) to or for the use of the United States, any State, any political subdivision thereof, or the District of Columbia, for exclusively public purposes;
  • (2) to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), 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, which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office;
  • (3) 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 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, such trust, fraternal society, order, or association would not be disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and such trustee or trustees, or such fraternal society, order, or association, does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office;
  • (4) to or for the use of any veterans’ organization incorporated by Act of Congress, or of its departments or local chapters or posts, no part of the net earnings of which inures to the benefit of any private shareholder or individual; or
  • (5) to an employee stock ownership plan if such transfer qualifies as a qualified gratuitous transfer of qualified employer securities within the meaning of section 664(g).
• (b) Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.
• (c) If the tax imposed by section 2001, 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 section, then the amount deductible under this section shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes.
• (d) The amount of the deduction under this section for any transfer shall not exceed the value of the transferred property required to be included in the gross estate.
• (e)
  • (1) No deduction shall be allowed under this section for a transfer to or for the use of an organization or trust described in section 508(d) or 4948(c)(4) subject to the conditions specified in such sections.
  • (2) Where an interest in property (other than an interest described in section 170(f)(3)(B)) passes or has passed from the decedent to a person, or for a use, described in subsection (a), and an interest (other than an interest which is extinguished upon the decedent’s death) in the same property passes or has passed (for less than an adequate and full consideration in money or money’s worth) from the decedent to a person, or for a use, not described in subsection (a), no deduction shall be allowed under this section for the interest which passes or has passed to the person, or for the use, described in subsection (a) unless—
    • (A) in the case of a remainder interest, such interest is in a trust which is a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664) or a pooled income fund (described in section 642(c)(5)), or
    • (B) in the case of any other interest, such interest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair market value of the property (to be determined yearly).
  • (3)
    • (A) A deduction shall be allowed under subsection (a) in respect of any qualified reformation.
    • (B) For purposes of this paragraph, the term “qualified reformation” means a change of a governing instrument by reformation, amendment, construction, or otherwise which changes a reformable interest into a qualified interest but only if—
      • (i) any difference between—
        • (I) the actuarial value (determined as of the date of the decedent’s death) of the qualified interest, and
        • (II) the actuarial value (as so determined) of the reformable interest,
      • (ii) in the case of—
        • (I) a charitable remainder interest, the nonremainder interest (before and after the qualified reformation) terminated at the same time, or
        • (II) any other interest, the reformable interest and the qualified interest are for the same period, and
      • (iii) such change is effective as of the date of the decedent’s death.
    • (C) For purposes of this paragraph—
      • (i) The term “reformable interest” means any interest for which a deduction would be allowable under subsection (a) at the time of the decedent’s death but for paragraph (2).
      • (ii) The term “reformable interest” does not include any interest unless, before the remainder vests in possession, all payments to persons other than an organization described in subsection (a) are expressed either in specified dollar amounts or a fixed percentage of the fair market value of the property. For purposes of determining whether all such payments are expressed as a fixed percentage of the fair market value of the property, section 664(d)(3) shall be taken into account.
      • (iii) Clause (ii) shall not apply to any interest if a judicial proceeding is commenced to change such interest into a qualified interest not later than the 90th day after—
        • (I) if an estate tax return is required to be filed, the last date (including extensions) for filing such return, or
        • (II) if no estate tax return is required to be filed, the last date (including extensions) for filing the income tax return for the 1st taxable year for which such a return is required to be filed by the trust.
      • (iv) In the case of any interest passing under a will executed before January 1, 1979 , or under a trust created before such date, clause (ii) shall not apply.
    • (D) For purposes of this paragraph, the term “qualified interest” means an interest for which a deduction is allowable under subsection (a).
    • (E) The deduction referred to in subparagraph (A) shall not exceed the amount of the deduction which would have been allowable for the reformable interest but for paragraph (2).
    • (F) If (by reason of the death of any individual, or by termination or distribution of a trust in accordance with the terms of the trust instrument) by the due date for filing the estate tax return (including any extension thereof) a reformable interest is in a wholly charitable trust or passes directly to a person or for a use described in subsection (a), a deduction shall be allowed for such reformable interest as if it had met the requirements of paragraph (2) on the date of the decedent’s death. For purposes of the preceding sentence, the term “wholly charitable trust” means a charitable trust which, upon the allowance of a deduction, would be described in section 4947(a)(1).
    • (G) The period for assessing any deficiency of any tax attributable to the application of this paragraph shall not expire before the date 1 year after the date on which the Secretary is notified that such reformation (or other proceeding pursuant to subparagraph (J)) has occurred.
    • (H) The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph, including regulations providing such adjustments in the application of the provisions of section 508 (relating to special rules relating to section 501(c)(3) organizations), subchapter J (relating to estates, trusts, beneficiaries, and decedents), and chapter 42 (relating to private foundations) as may be necessary by reason of the qualified reformation.
    • (I) The Secretary shall prescribe regulations (consistent with the provisions of this paragraph) permitting reformations in the case of any failure—
      • (i) to meet the requirements of section 170(f)(3)(B) (relating to remainder interests in personal residence or farm, etc.), or
      • (ii) to meet the requirements of section 642(c)(5).
    • (J) In the case of a trust that would qualify (or could be reformed to qualify pursuant to subparagraph (B)) but for failure to satisfy the requirement of paragraph (1)(D) or (2)(D) of section 664(d), such trust may be—
      • (i) declared null and void ab initio, or
      • (ii) changed by reformation, amendment, or otherwise to meet such requirement by reducing the payout rate or the duration (or both) of any noncharitable beneficiary’s interest to the extent necessary to satisfy such requirement,
  • (4)
    • (A) In the case of a qualified contribution of a work of art, the work of art and the copyright on such work of art shall be treated as separate properties for purposes of paragraph (2).
    • (B) For purposes of this paragraph, the term “work of art” means any tangible personal property with respect to which there is a copyright under Federal law.
    • (C) For purposes of this paragraph, the term “qualified contribution” means any transfer of property to a qualified organization if the use of the property by the organization is related to the purpose or function constituting the basis for its exemption under section 501.
    • (D) For purposes of this paragraph, the term “qualified organization” means any organization described in section 501(c)(3) other than a private foundation (as defined in section 509). For purposes of the preceding sentence, a private operating foundation (as defined in section 4942(j)(3)) shall not be treated as a private foundation.
  • (5) A deduction otherwise allowed under subsection (a) for any contribution to a donor advised fund (as defined in section 4966(d)(2)) shall only be allowed if—
    • (A) the sponsoring organization (as defined in section 4966(d)(1)) with respect to such donor advised fund is not—
      • (i) described in paragraph (3) or (4) of subsection (a), or
      • (ii) a type III supporting organization (as defined in section 4943(f)(5)(A)) which is not a functionally integrated type III supporting organization (as defined in section 4943(f)(5)(B)), and
    • (B) the taxpayer obtains a contemporaneous written acknowledgment (determined under rules similar to the rules of section 170(f)(8)(C)) from the sponsoring organization (as so defined) of such donor advised fund that such organization has exclusive legal control over the assets contributed.
• (f) A deduction shall be allowed under subsection (a) in respect of any transfer of a qualified real property interest (as defined in section 170(h)(2)(C)) which meets the requirements of section 170(h) (without regard to paragraph (4)(A) thereof).
• (g)
  • (1) For option as to time for valuation for purpose of deduction under this section, see section 2032.
  • (2) For treatment of certain organizations providing child care, see section 501(k).
  • (3) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925 , as amended ( 2 U.S.C. 161 ).
  • (4) For treatment of gifts and bequests for the benefit of the Naval Historical Center as gifts or bequests to or for the use of the United States, see section 8622 of title 10 , United States Code.
  • (5) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 ( 16 U.S.C. 191 ).
  • (6) For treatment of gifts, devises, or bequests accepted by the Secretary of State, the Director of the International Communication Agency, or the Director of the United States International Development Cooperation Agency as gifts, devises, or bequests to or for the use of the United States, see section 25 of the State Department Basic Authorities Act of 1956.
  • (7) For treatment of gifts or bequests of money accepted by the Attorney General for credit to “Commissary Funds, Federal Prisons,” as gifts or bequests to or for the use of the United States, see section 4043 of title 18 , United States Code.
  • (8) For payment of tax on gifts and bequests of United States obligations to the United States, see section 3113(e) of title 31 , United States Code.
  • (9) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see section 8473 of title 10 , United States Code.
  • (10) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see section 8474 of title 10 , United States Code.
  • (11) For exemption of gifts and bequests received by National Archives Trust Fund Board, see section 2308 of title 44 , United States Code.
  • (12) For treatment of gifts and bequests to or for the use of Indian tribal governments (or their subdivisions), see section 7871.

§ 2056. Bequests, etc., to surviving spouse

• (a) For purposes of the tax imposed by section 2001, the value of the taxable estate shall, except as limited by subsection (b), be determined by deducting from the value of the gross estate an amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, but only to the extent that such interest is included in determining the value of the gross estate.
• (b)
  • (1) Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, an interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed under this section with respect to such interest—
    • (A) if an interest in such property passes or has passed (for less than an adequate and full consideration in money or money’s worth) from the decedent to any person other than such surviving spouse (or the estate of such spouse); and
    • (B) if by reason of such passing such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving spouse;
    • (C) if such interest is to be acquired for the surviving spouse, pursuant to directions of the decedent, by his executor or by the trustee of a trust.
  • (2) Where the assets (included in the decedent’s gross estate) out of which, or the proceeds of which, an interest passing to the surviving spouse may be satisfied include a particular asset or assets with respect to which no deduction would be allowed if such asset or assets passed from the decedent to such spouse, then the value of such interest passing to such spouse shall, for purposes of subsection (a), be reduced by the aggregate value of such particular assets.
  • (3) For purposes of this subsection, an interest passing to the surviving spouse shall not be considered as an interest which will terminate or fail on the death of such spouse if—
    • (A) such death will cause a termination or failure of such interest only if it occurs within a period not exceeding 6 months after the decedent’s death, or only if it occurs as a result of a common disaster resulting in the death of the decedent and the surviving spouse, or only if it occurs in the case of either such event; and
    • (B) such termination or failure does not in fact occur.
  • (4) In determining for purposes of subsection (a) the value of any interest in property passing to the surviving spouse for which a deduction is allowed by this section—
    • (A) there shall be taken into account the effect which the tax imposed by section 2001, or any estate, succession, legacy, or inheritance tax, has on the net value to the surviving spouse of such interest; and
    • (B) where such interest or property is encumbered in any manner, or where the surviving spouse incurs any obligation imposed by the decedent with respect to the passing of such interest, such encumbrance or obligation shall be taken into account in the same manner as if the amount of a gift to such spouse of such interest were being determined.
  • (5) In the case of an interest in property passing from the decedent, if his surviving spouse is entitled for life to all the income from the entire interest, or all the income from a specific portion thereof, payable annually or at more frequent intervals, with power in the surviving spouse to appoint the entire interest, or such specific portion (exercisable in favor of such surviving spouse, or of the estate of such surviving spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), and with no power in any other person to appoint any part of the interest, or such specific portion, to any person other than the surviving spouse—
    • (A) the interest or such portion thereof so passing shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and
    • (B) no part of the interest so passing shall, for purposes of paragraph (1)(A), be considered as passing to any person other than the surviving spouse.
  • (6) In the case of an interest in property passing from the decedent consisting of proceeds under a life insurance, endowment, or annuity contract, if under the terms of the contract such proceeds are payable in installments or are held by the insurer subject to an agreement to pay interest thereon (whether the proceeds, on the termination of any interest payments, are payable in a lump sum or in annual or more frequent installments), and such installment or interest payments are payable annually or at more frequent intervals, commencing not later than 13 months after the decedent’s death, and all amounts, or a specific portion of all such amounts, payable during the life of the surviving spouse are payable only to such spouse, and such spouse has the power to appoint all amounts, or such specific portion, payable under such contract (exercisable in favor of such surviving spouse, or of the estate of such surviving spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), with no power in any other person to appoint such amounts to any person other than the surviving spouse—
    • (A) such amounts shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and
    • (B) no part of such amounts shall, for purposes of paragraph (1)(A), be considered as passing to any person other than the surviving spouse.
  • (7)
    • (A) In the case of qualified terminable interest property—
      • (i) for purposes of subsection (a), such property shall be treated as passing to the surviving spouse, and
      • (ii) for purposes of paragraph (1)(A), no part of such property shall be treated as passing to any person other than the surviving spouse.
    • (B) For purposes of this paragraph—
      • (i) The term “qualified terminable interest property” means property—
        • (I) which passes from the decedent,
        • (II) in which the surviving spouse has a qualifying income interest for life, and
        • (III) to which an election under this paragraph applies.
      • (ii) The surviving spouse has a qualifying income interest for life if—
        • (I) the surviving spouse is entitled to all the income from the property, payable annually or at more frequent intervals, or has a usufruct interest for life in the property, and
        • (II) no person has a power to appoint any part of the property to any person other than the surviving spouse.
      • (iii) The term “property” includes an interest in property.
      • (iv) A specific portion of property shall be treated as separate property.
      • (v) An election under this paragraph with respect to any property shall be made by the executor on the return of tax imposed by section 2001. Such an election, once made, shall be irrevocable.
    • (C) In the case of an annuity included in the gross estate of the decedent under section 2039 (or, in the case of an interest in an annuity arising under the community property laws of a State, included in the gross estate of the decedent under section 2033) where only the surviving spouse has the right to receive payments before the death of such surviving spouse—
      • (i) the interest of such surviving spouse shall be treated as a qualifying income interest for life, and
      • (ii) the executor shall be treated as having made an election under this subsection with respect to such annuity unless the executor otherwise elects on the return of tax imposed by section 2001.
  • (8)
    • (A) If the surviving spouse of the decedent is the only beneficiary of a qualified charitable remainder trust who is not a charitable beneficiary nor an ESOP beneficiary, paragraph (1) shall not apply to any interest in such trust which passes or has passed from the decedent to such surviving spouse.
    • (B) For purposes of subparagraph (A)—
      • (i) The term “charitable beneficiary” means any beneficiary which is an organization described in section 170(c).
      • (ii) The term “ESOP beneficiary” means any beneficiary which is an employee stock ownership plan (as defined in section 4975(e)(7)) that holds a remainder interest in qualified employer securities (as defined in section 664(g)(4)) to be transferred to such plan in a qualified gratuitous transfer (as defined in section 664(g)(1)).
      • (iii) The term “qualified charitable remainder trust” means a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664).
  • (9) Nothing in this section or any other provision of this chapter shall allow the value of any interest in property to be deducted under this chapter more than once with respect to the same decedent.
  • (10) For purposes of paragraphs (5), (6), and (7)(B)(iv), the term “specific portion” only includes a portion determined on a fractional or percentage basis.
• (c) For purposes of this section, an interest in property shall be considered as passing from the decedent to any person if and only if—
  • (1) such interest is bequeathed or devised to such person by the decedent;
  • (2) such interest is inherited by such person from the decedent;
  • (3) such interest is the dower or curtesy interest (or statutory interest in lieu thereof) of such person as surviving spouse of the decedent;
  • (4) such interest has been transferred to such person by the decedent at any time;
  • (5) such interest was, at the time of the decedent’s death, held by such person and the decedent (or by them and any other person) in joint ownership with right of survivorship;
  • (6) the decedent had a power (either alone or in conjunction with any person) to appoint such interest and if he appoints or has appointed such interest to such person, or if such person takes such interest in default on the release or nonexercise of such power; or
  • (7) such interest consists of proceeds of insurance on the life of the decedent receivable by such person.
• (d)
  • (1) Except as provided in paragraph (2), if the surviving spouse of the decedent is not a citizen of the United States—
    • (A) no deduction shall be allowed under subsection (a), and
    • (B) section 2040(b) shall not apply.
  • (2)
    • (A) Paragraph (1) shall not apply to any property passing to the surviving spouse in a qualified domestic trust.
    • (B) If any property passes from the decedent to the surviving spouse of the decedent, for purposes of subparagraph (A), such property shall be treated as passing to such spouse in a qualified domestic trust if—
      • (i) such property is transferred to such a trust before the date on which the return of the tax imposed by this chapter is made, or
      • (ii) such property is irrevocably assigned to such a trust under an irrevocable assignment made on or before such date which is enforceable under local law.
  • (3) If—
    • (A) property passes to the surviving spouse of the decedent (hereinafter in this paragraph referred to as the “first decedent”),
    • (B) without regard to this subsection, a deduction would be allowable under subsection (a) with respect to such property, and
    • (C) such surviving spouse dies and the estate of such surviving spouse is subject to the tax imposed by this chapter,
  • (4) Paragraph (1) shall not apply if—
    • (A) the surviving spouse of the decedent becomes a citizen of the United States before the day on which the return of the tax imposed by this chapter is made, and
    • (B) such spouse was a resident of the United States at all times after the date of the death of the decedent and before becoming a citizen of the United States.
  • (5)
    • (A) In the case of any property with respect to which a deduction would be allowable under subsection (a) but for this subsection, the determination of whether a trust is a qualified domestic trust shall be made—
      • (i) as of the date on which the return of the tax imposed by this chapter is made, or
      • (ii) if a judicial proceeding is commenced on or before the due date (determined with regard to extensions) for filing such return to change such trust into a trust which is a qualified domestic trust, as of the time when the changes pursuant to such proceeding are made.
    • (B) If a judicial proceeding described in subparagraph (A)(ii) is commenced with respect to any trust, the period for assessing any deficiency of tax attributable to any failure of such trust to be a qualified domestic trust shall not expire before the date 1 year after the date on which the Secretary is notified that the trust has been changed pursuant to such judicial proceeding or that such proceeding has been terminated.

§ 2056A. Qualified domestic trust

• (a) For purposes of this section and section 2056(d), the term “qualified domestic trust” means, with respect to any decedent, any trust if—
  • (1) the trust instrument—
    • (A) except as provided in regulations prescribed by the Secretary, requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation, and
    • (B) provides that no distribution (other than a distribution of income) may be made from the trust unless a trustee who is an individual citizen of the United States or a domestic corporation has the right to withhold from such distribution the tax imposed by this section on such distribution,
  • (2) such trust meets such requirements as the Secretary may by regulations prescribe to ensure the collection of any tax imposed by subsection (b), and
  • (3) an election under this section by the executor of the decedent applies to such trust.
• (b)
  • (1) There is hereby imposed an estate tax on—
    • (A) any distribution before the date of the death of the surviving spouse from a qualified domestic trust, and
    • (B) the value of the property remaining in a qualified domestic trust on the date of the death of the surviving spouse.
  • (2)
    • (A) In the case of any taxable event, the amount of the estate tax imposed by paragraph (1) shall be the amount equal to—
      • (i) the tax which would have been imposed under section 2001 on the estate of the decedent if the taxable estate of the decedent had been increased by the sum of—
        • (I) the amount involved in such taxable event, plus
        • (II) the aggregate amount involved in previous taxable events with respect to qualified domestic trusts of such decedent, reduced by
      • (ii) the tax which would have been imposed under section 2001 on the estate of the decedent if the taxable estate of the decedent had been increased by the amount referred to in clause (i)(II).
    • (B)
      • (i) If the tax imposed on the estate of the decedent under section 2001 is not finally determined before the taxable event, the amount of the tax imposed by paragraph (1) on such event shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent’s death.
      • (ii) If—
        • (I) the amount of the tax determined under clause (i), exceeds
        • (II) the tax determined under subparagraph (A) on the basis of the final determination of the tax imposed by section 2001 on the estate of the decedent,
    • (C) If there is more than 1 qualified domestic trust with respect to any decedent, the amount of the tax imposed by paragraph (1) with respect to such trusts shall be determined by using the highest rate of tax in effect under section 2001 as of the date of the decedent’s death (and the provisions of paragraph (3)(B) shall not apply) unless, pursuant to a designation made by the decedent’s executor, there is 1 person—
      • (i) who is an individual citizen of the United States or a domestic corporation and is responsible for filing all returns of tax imposed under paragraph (1) with respect to such trusts and for paying all tax so imposed, and
      • (ii) who meets such requirements as the Secretary may by regulations prescribe.
  • (3)
    • (A) No tax shall be imposed by paragraph (1)(A) on any distribution of income to the surviving spouse.
    • (B) No tax shall be imposed by paragraph (1)(A) on any distribution to the surviving spouse on account of hardship.
  • (4) If any qualified domestic trust ceases to meet the requirements of paragraphs (1) and (2) of subsection (a), the tax imposed by paragraph (1) shall apply as if the surviving spouse died on the date of such cessation.
  • (5)
    • (A) The estate tax imposed by paragraph (1)(A) shall be due and payable on the 15th day of the 4th month following the calendar year in which the taxable event occurs; except that the estate tax imposed by paragraph (1)(A) on distributions during the calendar year in which the surviving spouse dies shall be due and payable not later than the date on which the estate tax imposed by paragraph (1)(B) is due and payable.
    • (B) The estate tax imposed by paragraph (1)(B) shall be due and payable on the date 9 months after the date of such death.
  • (6) Each trustee shall be personally liable for the amount of the tax imposed by paragraph (1). Rules similar to the rules of section 2204 shall apply for purposes of the preceding sentence.
  • (7) For purposes of section 2056(d), any tax paid under paragraph (1) shall be treated as a tax paid under section 2001 with respect to the estate of the decedent.
  • (8) For purposes of section 6324, any tax imposed by paragraph (1) shall be treated as an estate tax imposed under this chapter with respect to a decedent dying on the date of the taxable event (and the property involved shall be treated as the gross estate of such decedent).
  • (9) The term “taxable event” means the event resulting in tax being imposed under paragraph (1).
  • (10)
    • (A) If any property remaining in the qualified domestic trust on the date of the death of the surviving spouse is includible in the gross estate of such spouse for purposes of this chapter (or would be includible if such spouse were a citizen or resident of the United States), any benefit which is allowable (or would be allowable if such spouse were a citizen or resident of the United States) with respect to such property to the estate of such spouse under section 2014, 2032, 2032A, 2055, 2056, 2058, or 6166 shall be allowed for purposes of the tax imposed by paragraph (1)(B).
    • (B) If the estate of the surviving spouse meets the requirements of section 303 with respect to any property described in subparagraph (A), for purposes of section 303, the tax imposed by paragraph (1)(B) with respect to such property shall be treated as a Federal estate tax payable with respect to the estate of the surviving spouse.
    • (C) The provisions of section 6161(a)(2) shall apply with respect to the tax imposed by paragraph (1)(B), and the reference in such section to the executor shall be treated as a reference to the trustees of the trust.
  • (11) For purposes of this subsection, if any portion of the tax imposed by paragraph (1)(A) with respect to any distribution is paid out of the trust, an amount equal to the portion so paid shall be treated as a distribution described in paragraph (1)(A).
  • (12) If the surviving spouse of the decedent becomes a citizen of the United States and if—
    • (A) such spouse was a resident of the United States at all times after the date of the death of the decedent and before such spouse becomes a citizen of the United States,
    • (B) no tax was imposed by paragraph (1)(A) with respect to any distribution before such spouse becomes such a citizen, or
    • (C) such spouse elects—
      • (i) to treat any distribution on which tax was imposed by paragraph (1)(A) as a taxable gift made by such spouse for purposes of—
        • (I) section 2001, and
        • (II) determining the amount of the tax imposed by section 2501 on actual taxable gifts made by such spouse during the year in which the spouse becomes a citizen or any subsequent year, and
      • (ii) to treat any reduction in the tax imposed by paragraph (1)(A) by reason of the credit allowable under section 2010 with respect to the decedent as a credit allowable to such surviving spouse under section 2505 for purposes of determining the amount of the credit allowable under section 2505 with respect to taxable gifts made by the surviving spouse during the year in which the spouse becomes a citizen or any subsequent year,
  • (13) For purposes of section 1015, any distribution on which tax is imposed by paragraph (1)(A) shall be treated as a transfer by gift, and any tax paid under paragraph (1)(A) shall be treated as a gift tax.
  • (14) Any interest in a qualified domestic trust shall not be treated as failing to meet the requirements of paragraph (5) or (7) of section 2056(b) merely by reason of any provision of the trust instrument permitting the withholding from any distribution of an amount to pay the tax imposed by paragraph (1) on such distribution.
  • (15) No tax shall be imposed by paragraph (1) on any distribution to the surviving spouse to the extent such distribution is to reimburse such surviving spouse for any tax imposed by subtitle A on any item of income of the trust to which such surviving spouse is not entitled under the terms of the trust.
• (c) For purposes of this section—
  • (1) The term “property” includes an interest in property.
  • (2) Except as provided in regulations, the term “income” has the meaning given to such term by section 643(b).
  • (3) To the extent provided in regulations prescribed by the Secretary, the term “trust” includes other arrangements which have substantially the same effect as a trust.
• (d) An election under this section with respect to any trust shall be made by the executor on the return of the tax imposed by section 2001. Such an election, once made, shall be irrevocable. No election may be made under this section on any return if such return is filed more than one year after the time prescribed by law (including extensions) for filing such return.
• (e) The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations under which there may be treated as a qualified domestic trust any annuity or other payment which is includible in the decedent’s gross estate and is by its terms payable for life or a term of years.

§ 2058. State death taxes

• (a) For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or the District of Columbia, in respect of any property included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent).
• (b) The deduction allowed by this section shall include only such taxes as were actually paid and deduction therefor claimed before the later of—
  • (1) 4 years after the filing of the return required by section 6018, or
  • (2) if—
    • (A) a petition for redetermination of a deficiency has been filed with the Tax Court within the time prescribed in section 6213(a), the expiration of 60 days after the decision of the Tax Court becomes final,
    • (B) an extension of time has been granted under section 6161 or 6166 for payment of the tax shown on the return, or of a deficiency, the date of the expiration of the period of the extension, or
    • (C) a claim for refund or credit of an overpayment of tax imposed by this chapter has been filed within the time prescribed in section 6511, the latest of the expiration of—
      • (i) 60 days from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance of any part of such claim,
      • (ii) 60 days after a decision by any court of competent jurisdiction becomes final with respect to a timely suit instituted upon such claim, or
      • (iii) 2 years after a notice of the waiver of disallowance is filed under section 6532(a)(3).

§ 2101. Tax imposed

• (a) Except as provided in section 2107, a tax is hereby imposed on the transfer of the taxable estate (determined as provided in section 2106) of every decedent nonresident not a citizen of the United States.
• (b) The tax imposed by this section shall be the amount equal to the excess (if any) of—
  • (1) a tentative tax computed under section 2001(c) on the sum of—
    • (A) the amount of the taxable estate, and
    • (B) the amount of the adjusted taxable gifts, over
  • (2) a tentative tax computed under section 2001(c) on the amount of the adjusted taxable gifts.
• (c)
  • (1) For purposes of this section, the term “adjusted taxable gifts” means the total amount of the taxable gifts (within the meaning of section 2503 as modified by section 2511) made by the decedent after December 31, 1976 , other than gifts which are includible in the gross estate of the decedent.
  • (2) For purposes of this section, the rules of section 2001(d) shall apply.

§ 2102. Credits against tax

• (a) The tax imposed by section 2101 shall be credited with the amounts determined in accordance with sections 2012 and 2013 (relating to gift tax and tax on prior transfers).
• (b)
  • (1) A credit of $13,000 shall be allowed against the tax imposed by section 2101.
  • (2) In the case of a decedent who is considered to be a “nonresident not a citizen of the United States” under section 2209, the credit under this subsection shall be the greater of—
    • (A) $13,000, or
    • (B) that proportion of $46,800 which the value of that part of the decedent’s gross estate which at the time of his death is situated in the United States bears to the value of his entire gross estate wherever situated.
  • (3)
    • (A) To the extent required under any treaty obligation of the United States, the credit allowed under this subsection shall be equal to the amount which bears the same ratio to the applicable credit amount in effect under section 2010(c) for the calendar year which includes the date of death as the value of the part of the decedent’s gross estate which at the time of his death is situated in the United States bears to the value of his entire gross estate wherever situated. For purposes of the preceding sentence, property shall not be treated as situated in the United States if such property is exempt from the tax imposed by this subchapter under any treaty obligation of the United States.
    • (B) If a credit has been allowed under section 2505 with respect to any gift made by the decedent, each dollar amount contained in paragraph (1) or (2) or subparagraph (A) of this paragraph (whichever applies) shall be reduced by the amount so allowed.
  • (4) The credit allowed under this subsection shall not exceed the amount of the tax imposed by section 2101.
  • (5) For purposes of subsection (a), sections 2012 and 2013 shall be applied as if the credit allowed under this subsection were allowed under section 2010.

§ 2103. Definition of gross estate

For the purpose of the tax imposed by section 2101, the value of the gross estate of every decedent nonresident not a citizen of the United States shall be that part of his gross estate (determined as provided in section 2031) which at the time of his death is situated in the United States.

§ 2104. Property within the United States

• (a) For purposes of this subchapter shares of stock owned and held by a nonresident not a citizen of the United States shall be deemed property within the United States only if issued by a domestic corporation.
• (b) For purposes of this subchapter, any property of which the decedent has made a transfer, by trust or otherwise, within the meaning of sections 2035 to 2038, inclusive, 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.
• (c) For purposes of this subchapter, debt obligations of—
  • (1) a United States person, or
  • (2) the United States, a State or any political subdivision thereof, or the District of Columbia,

§ 2105. Property without the United States

• (a) For purposes of this subchapter, the amount receivable as insurance on the life of a nonresident not a citizen of the United States shall not be deemed property within the United States.
• (b) For purposes of this subchapter, the following shall not be deemed property within the United States—
  • (1) amounts described in section 871(i)(3), if any interest thereon would not be subject to tax by reason of section 871(i)(1) were such interest received by the decedent at the time of his death,
  • (2) deposits with a foreign branch of a domestic corporation or domestic partnership, if such branch is engaged in the commercial banking business,
  • (3) debt obligations, if, without regard to whether a statement meeting the requirements of section 871(h)(5) has been received, any interest thereon would be eligible for the exemption from tax under section 871(h)(1) were such interest received by the decedent at the time of his death, and
  • (4) obligations which would be original issue discount obligations as defined in section 871(g)(1) but for subparagraph (B)(i) thereof, if any interest thereon (were such interest received by the decedent at the time of his death) would not be effectively connected with the conduct of a trade or business within the United States.
• (c) For purposes of this subchapter, works of art owned by a nonresident not a citizen of the United States shall not be deemed property within the United States if such works of art are—
  • (1) imported into the United States solely for exhibition purposes,
  • (2) loaned for such purposes, to a public gallery or museum, no part of the net earnings of which inures to the benefit of any private stockholder or individual, and
  • (3) at the time of the death of the owner, on exhibition, or en route to or from exhibition, in such a public gallery or museum.
• (d)
  • (1) For purposes of this subchapter, stock in a regulated investment company (as defined in section 851) owned by a nonresident not a citizen of the United States shall not be deemed property within the United States in the proportion that, at the end of the quarter of such investment company’s taxable year immediately preceding a decedent’s date of death (or at such other time as the Secretary may designate in regulations), the assets of the investment company that were qualifying assets with respect to the decedent bore to the total assets of the investment company.
  • (2) For purposes of this subsection, qualifying assets with respect to a decedent are assets that, if owned directly by the decedent, would have been—
    • (A) amounts, deposits, or debt obligations described in subsection (b) of this section,
    • (B) debt obligations described in the last sentence of section 2104(c), or
    • (C) other property not within the United States.
  • (3) This subsection shall not apply to estates of decedents dying after December 31, 2011 .

§ 2106. Taxable estate

• (a) For purposes of the tax imposed by section 2101, the value of the taxable estate of every decedent nonresident not a citizen of the United States shall be determined by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States—
  • (1) That proportion of the deductions specified in sections 2053 and 2054 (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 2053 in the case of a claim against the estate which was founded on 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 (2) if such promise or agreement constituted a bequest.
  • (2)
    • (A) 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 before the date prescribed for the filing of the estate tax return)—
      • (i) to or for the use of the United States, any State, any political subdivision thereof, or the District of Columbia, for exclusively public purposes;
      • (ii) 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, which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office; or
      • (iii) 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, such trust, fraternal society, order, or association would not be disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and such trustee or trustees, or such fraternal society, order, or association, does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office;
    • (B) Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this paragraph shall, for purposes of this paragraph, be considered a bequest of such decedent.
    • (C) If the tax imposed by section 2101, 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.
    • (D) 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.
    • (E) The provisions of section 2055(e) shall be applied in the determination of the amount allowable as a deduction under this paragraph.
    • (F)
      • (i) For option as to time for valuation for purposes of deduction under this section, see section 2032.
      • (ii) For exemption of certain bequests for the benefit of the United States and for rules of construction for certain bequests, see section 2055(g).
      • (iii) For treatment of gifts and bequests to or for the use of Indian tribal governments (or their subdivisions), see section 7871.
  • (3) The amount which would be deductible with respect to property situated in the United States at the time of the decedent’s death under the principles of section 2056.
  • (4) The amount which bears the same ratio to the State death taxes as the value of the property, as determined for purposes of this chapter, upon which State death taxes were paid and which is included in the gross estate under section 2103 bears to the value of the total gross estate under section 2103. For purposes of this paragraph, the term “State death taxes” means the taxes described in section 2058(a).
• (b) No deduction shall be allowed under paragraphs (1) and (2) of subsection (a) 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 6018 the value at the time of his death of that part of the gross estate of such nonresident not situated in the United States.

§ 2107. Expatriation to avoid tax

• (a) A tax computed in accordance with the table contained in section 2001 is hereby imposed on the transfer of the taxable estate, determined as provided in section 2106, of every decedent nonresident not a citizen of the United States if the date of death occurs during a taxable year with respect to which the decedent is subject to tax under section 877(b).
• (b) For purposes of the tax imposed by subsection (a), the value of the gross estate of every decedent to whom subsection (a) applies shall be determined as provided in section 2103, except that—
  • (1) if such decedent owned (within the meaning of section 958(a)) at the time of his death 10 percent or more of the total combined voting power of all classes of stock entitled to vote of a foreign corporation, and
  • (2) if such decedent owned (within the meaning of section 958(a)), or is considered to have owned (by applying the ownership rules of section 958(b)), at the time of his death, more than 50 percent of—
    • (A) the total combined voting power of all classes of stock entitled to vote of such corporation, or
    • (B) the total value of the stock of such corporation,
• (c)
  • (1)
    • (A) A credit of $13,000 shall be allowed against the tax imposed by subsection (a).
    • (B) The credit allowed under this paragraph shall not exceed the amount of the tax imposed by subsection (a).
  • (2)
    • (A) The tax imposed by subsection (a) shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property which is included in the gross estate solely by reason of subsection (b).
    • (B) The credit allowed by subparagraph (A) for such taxes paid to a foreign country shall not exceed the lesser of—
      • (i) the amount which bears the same ratio to the amount of such taxes actually paid to such foreign country as the value of the property subjected to such taxes by such foreign country and included in the gross estate solely by reason of subsection (b) bears to the value of all property subjected to such taxes by such foreign country, or
      • (ii) such property’s proportionate share of the excess of—
        • (I) the tax imposed by subsection (a), over
        • (II) the tax which would be imposed by section 2101 but for this section.
    • (C) In the case of property which is included in the gross estate solely by reason of subsection (b), such property’s proportionate share is the percentage which the value of such property bears to the total value of all property included in the gross estate solely by reason of subsection (b).
  • (3) The tax imposed by subsection (a) shall be credited with the amounts determined in accordance with subsections (a) and (b) of section 2102. For purposes of subsection (a) of section 2102, sections 2012 and 2013 shall be applied as if the credit allowed under paragraph (1) were allowed under section 2010.
• (d) If the Secretary establishes that it is reasonable to believe that an individual’s loss of United States citizenship would, but for this section, result in a substantial reduction in the estate, inheritance, legacy, and succession taxes in respect of the transfer of his estate, the burden of proving that such loss of citizenship did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A shall be on the executor of such individual’s estate.
• (e) For comparable treatment of long-term lawful permanent residents who ceased to be taxed as residents, see section 877(e).

§ 2108. Application of pre-1967 estate tax provisions

• (a) Whenever the President finds that—
  • (1) under the laws of any foreign country, considering the tax system of such foreign country, a more burdensome tax is imposed by such foreign country on the transfer of estates of decedents who were citizens of the United States and not residents of such foreign country than the tax imposed by this subchapter on the transfer of estates of decedents who were residents of such foreign country,
  • (2) such foreign country, when requested by the United States to do so, has not acted to revise or reduce such tax so that it is no more burdensome than the tax imposed by this subchapter on the transfer of estates of decedents who were residents of such foreign country, and
  • (3) it is in the public interest to apply pre-1967 tax provisions in accordance with this section to the transfer of estates of decedents who were residents of such foreign country,
• (b) Whenever the President finds that the laws of any foreign country with respect to which the President has made a proclamation under subsection (a) have been modified so that the tax on the transfer of estates of decedents who were citizens of the United States and not residents of such foreign country is no longer more burdensome than the tax imposed by this subchapter on the transfer of estates of decedents who were residents of such foreign country, he shall proclaim that the tax on the transfer of the estate of every decedent who was a resident of such foreign country at the time of his death shall, in the case of decedents dying after the date of such proclamation, be determined under this subchapter without regard to subsection (a).
• (c) No proclamation shall be issued by the President pursuant to this section unless, at least 30 days prior to such proclamation, he has notified the Senate and the House of Representatives of his intention to issue such proclamation.
• (d) The Secretary shall prescribe such regulations as may be necessary or appropriate to implement this section.

§ 2201. Combat zone-related deaths of members of the Armed Forces, deaths of astronauts, and deaths of victims of certain terrorist attacks

• (a) Unless the executor elects not to have this section apply, in applying sections 2001 and 2101 to the estate of a qualified decedent, the rate schedule set forth in subsection (c) shall be deemed to be the rate schedule set forth in section 2001(c).
• (b) For purposes of this section, the term “qualified decedent” means—
  • (1) any citizen or resident of the United States dying while in active service of the Armed Forces of the United States, if such decedent—
    • (A) was killed in action while serving in a combat zone, as determined under section 112(c), or
    • (B) died as a result of wounds, disease, or injury suffered while serving in a combat zone (as determined under section 112(c)), and while in the line of duty, by reason of a hazard to which such decedent was subjected as an incident of such service,
  • (2) any specified terrorist victim (as defined in section 692(d)(4)), and
  • (3) any astronaut whose death occurs in the line of duty.
• (c) If the amount with respect to which the tentative tax to be computed is: The tentative tax is: Not over $150,000 1 percent of the amount by which such amount exceeds $100,000. Over $150,000 but not over $200,000 $500 plus 2 percent of the excess over $150,000. Over $200,000 but not over $300,000 $1,500 plus 3 percent of the excess over $200,000. Over $300,000 but not over $500,000 $4,500 plus 4 percent of the excess over $300,000. Over $500,000 but not over $700,000 $12,500 plus 5 percent of the excess over $500,000. Over $700,000 but not over $900,000 $22,500 plus 6 percent of the excess over $700,000. Over $900,000 but not over $1,100,000 $34,500 plus 7 percent of the excess over $900,000. Over $1,100,000 but not over $1,600,000 $48,500 plus 8 percent of the excess over $1,100,000. Over $1,600,000 but not over $2,100,000 $88,500 plus 9 percent of the excess over $1,600,000. Over $2,100,000 but not over $2,600,000 $133,500 plus 10 percent of the excess over $2,100,000. Over $2,600,000 but not over $3,100,000 $183,500 plus 11 percent of the excess over $2,600,000. Over $3,100,000 but not over $3,600,000 $238,500 plus 12 percent of the excess over $3,100,000. Over $3,600,000 but not over $4,100,000 $298,500 plus 13 percent of the excess over $3,600,000. Over $4,100,000 but not over $5,100,000 $363,500 plus 14 percent of the excess over $4,100,000. Over $5,100,000 but not over $6,100,000 $503,500 plus 15 percent of the excess over $5,100,000. Over $6,100,000 but not over $7,100,000 $653,500 plus 16 percent of the excess over $6,100,000. Over $7,100,000 but not over $8,100,000 $813,500 plus 17 percent of the excess over $7,100,000. Over $8,100,000 but not over $9,100,000 $983,500 plus 18 percent of the excess over $8,100,000. Over $9,100,000 but not over $10,100,000 $1,163,500 plus 19 percent of the excess over $9,100,000. Over $10,100,000 $1,353,500 plus 20 percent of the excess over $10,100,000.
• (d) In the case of an estate to which this section applies, subsection (a) shall not apply in determining the credit under section 2010.

§ 2203. Definition of executor

The term “executor” wherever it is used in this title in connection with the estate tax imposed by this chapter means the executor or administrator of the decedent, or, if there is no executor or administrator appointed, qualified, and acting within the United States, then any person in actual or constructive possession of any property of the decedent.

§ 2204. Discharge of fiduciary from personal liability

• (a) If the executor makes written application to the Secretary for determination of the amount of the tax and discharge from personal liability therefor, the Secretary (as soon as possible, and in any event within 9 months after the making of such application, or, if the application is made before the return is filed, then within 9 months after the return is filed, but not after the expiration of the period prescribed for the assessment of the tax in section 6501) shall notify the executor of the amount of the tax. The executor, on payment of the amount of which he is notified (other than any amount the time for payment of which is extended under sections 6161, 6163, or 6166), and on furnishing any bond which may be required for any amount for which the time for payment is extended, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.
• (b) If a fiduciary (not including a fiduciary in respect of the estate of a nonresident decedent) other than the executor makes written application to the Secretary for determination of the amount of any estate tax for which the fiduciary may be personally liable, and for discharge from personal liability therefor, the Secretary upon the discharge of the executor from personal liability under subsection (a), or upon the expiration of 6 months after the making of such application by the fiduciary, if later, shall notify the fiduciary (1) of the amount of such tax for which it has been determined the fiduciary is liable, or (2) that it has been determined that the fiduciary is not liable for any such tax. Such application shall be accompanied by a copy of the instrument, if any, under which such fiduciary is acting, a description of the property held by the fiduciary, and such other information for purposes of carrying out the provisions of this section as the Secretary may require by regulations. On payment of the amount of such tax for which it has been determined the fiduciary is liable (other than any amount the time for payment of which has been extended under section 6161, 6163, or 6166), and on furnishing any bond which may be required for any amount for which the time for payment has been extended, or on receipt by him of notification of a determination that he is not liable for any such tax, the fiduciary shall be discharged from personal liability for any deficiency in such tax thereafter found to be due and shall be entitled to a receipt or writing evidencing such discharge.
• (c) For purposes of the second sentence of subsection (a) and the last sentence of subsection (b), an agreement which meets the requirements of section 6324A (relating to special lien for estate tax deferred under section 6166) shall be treated as the furnishing of bond with respect to the amount for which the time for payment has been extended under section 6166.
• (d) If the executor in good faith relies on gift tax returns furnished under section 6103(e)(3) for determining the decedent’s adjusted taxable gifts, the executor shall be discharged from personal liability with respect to any deficiency of the tax imposed by this chapter which is attributable to adjusted taxable gifts which—
  • (1) are made more than 3 years before the date of the decedent’s death, and
  • (2) are not shown on such returns.

§ 2205. Reimbursement out of estate

If the tax or any part thereof is paid by, or collected out of, that part of the estate passing to or in the possession of any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable contribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this chapter that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution.

§ 2206. Liability of life insurance beneficiaries

Unless the decedent directs otherwise in his will, if any part of the gross estate on which tax has been paid consists of proceeds of policies of insurance on the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds of such policies bear to the taxable estate. If there is more than one such beneficiary, the executor shall be entitled to recover from such beneficiaries in the same ratio. In the case of such proceeds receivable by the surviving spouse of the decedent for which a deduction is allowed under section 2056 (relating to marital deduction), this section shall not apply to such proceeds except as to the amount thereof in excess of the aggregate amount of the marital deductions allowed under such section.

§ 2207. Liability of recipient of property over which decedent had power of appointment

Unless the decedent directs otherwise in his will, if any part of the gross estate on which the tax has been paid consists of the value of property included in the gross estate under section 2041, the executor shall be entitled to recover from the person receiving such property by reason of the exercise, nonexercise, or release of a power of appointment such portion of the total tax paid as the value of such property bears to the taxable estate. If there is more than one such person, the executor shall be entitled to recover from such persons in the same ratio. In the case of such property received by the surviving spouse of the decedent for which a deduction is allowed under section 2056 (relating to marital deduction), this section shall not apply to such property except as to the value thereof reduced by an amount equal to the excess of the aggregate amount of the marital deductions allowed under section 2056 over the amount of proceeds of insurance upon the life of the decedent receivable by the surviving spouse for which proceeds a marital deduction is allowed under such section.

§ 2207A. Right of recovery in the case of certain marital deduction property

• (a)
  • (1) If any part of the gross estate consists of property the value of which is includible in the gross estate by reason of section 2044 (relating to certain property for which marital deduction was previously allowed), the decedent’s estate shall be entitled to recover from the person receiving the property the amount by which—
    • (A) the total tax under this chapter which has been paid, exceeds
    • (B) the total tax under this chapter which would have been payable if the value of such property had not been included in the gross estate.
  • (2) Paragraph (1) shall not apply with respect to any property to the extent that the decedent in his will (or a revocable trust) specifically indicates an intent to waive any right of recovery under this subchapter with respect to such property.
• (b) If for any calendar year tax is paid under chapter 12 with respect to any person by reason of property treated as transferred by such person under section 2519, such person shall be entitled to recover from the person receiving the property the amount by which—
  • (1) the total tax for such year under chapter 12, exceeds
  • (2) the total tax which would have been payable under such chapter for such year if the value of such property had not been taken into account for purposes of chapter 12.
• (c) For purposes of this section, if there is more than one person receiving the property, the right of recovery shall be against each such person.
• (d) In the case of penalties and interest attributable to additional taxes described in subsections (a) and (b), rules similar to subsections (a), (b), and (c) shall apply.

§ 2207B. Right of recovery where decedent retained interest

• (a)
  • (1) If any part of the gross estate on which tax has been paid consists of the value of property included in the gross estate by reason of section 2036 (relating to transfers with retained life estate), the decedent’s estate shall be entitled to recover from the person receiving the property the amount which bears the same ratio to the total tax under this chapter which has been paid as—
    • (A) the value of such property, bears to
    • (B) the taxable estate.
  • (2) Paragraph (1) shall not apply with respect to any property to the extent that the decedent in his will (or a revocable trust) specifically indicates an intent to waive any right of recovery under this subchapter with respect to such property.
• (b) For purposes of this section, if there is more than 1 person receiving the property, the right of recovery shall be against each such person.
• (c) In the case of penalties and interest attributable to the additional taxes described in subsection (a), rules similar to the rules of subsections (a) and (b) shall apply.
• (d) No person shall be entitled to recover any amount by reason of this section from a trust to which section 664 applies (determined without regard to this section).

§ 2208. Certain residents of possessions considered citizens of the United States

• (1) his being a citizen of such possession of the United States, or
• (2) his birth or residence within such possession of the United States.

§ 2209. Certain residents of possessions considered nonresidents not citizens of the United States

• (1) his being a citizen of such possession of the United States, or
• (2) his birth or residence within such possession of the United States.