When more than one gift is included in the gross estate, a separate computation of the two limitations on the credit is to be made for each gift.
"Amount of the gift" (C) ÷ Total taxable gifts, plus specific exemption allowed (D) * Total gift tax paid (B).
For purposes of the ratio stated above, the "amount of the gift" referred to as factor "C" is the value of the gift reduced by any portion excluded or deducted under sections 2503(b) (annual exclusion), 2522 (charitable deduction), or 2523 (marital deduction) of the Internal Revenue Code or corresponding provisions of prior law. In making the computations described in this paragraph, the values to be used are those finally determined for the purpose of the gift tax, irrespective of the values determined for the purpose of the estate tax. A similar computation is made in case only a portion of any gift is included in the decedent's gross estate. The application of this paragraph may be illustrated by the following example:
Example. The donor made gifts during the calendar year 1955 on which a gift tax was determined as shown below:
Gift of property to son on February 1 | $13,000 | |
Gift of property to wife on May 1 | 86,000 | |
Gift of property to charitable organization on May 15 | 10,000 | |
Total gifts | 109,000 | |
Less exclusions ($3,000 for each gift) | 9,000 | |
Total included amount of gifts | 100,000 | |
Marital deduction (for gift to wife) | $43,000 | |
Charitable deduction | 7,000 | |
Specific exemption ($30,000 less $20,000 used in prior years) | 10,000 | |
Total deductions | 60,000 | |
Taxable gifts | 40,000 | |
Total gift tax paid for calendar year 1955 | 3,600 |
The donor's gift to his wife was made in contemplation of death and was thereafter included in his gross estate. Under the "first limitation", the credit with respect to that gift cannot exceed:
[$86,000 - $3,000 - $43,000 (gift to wife, less annual exclusion and marital deduction)] ÷ [$40,000 + $10,000 (taxable gifts, plus specific exemption allowed)] * $3,600 (total gift tax paid) = $2,880.
"Value of the gift" (G) ÷ Value of gross estate, less marital and charitable deductions (H) * Gross estate tax, less credit for State death taxes (F).
$15,000 (annual exclusions allowed) ÷ $300,000 (value of transferred property for the purpose of the gift tax) * $270,000 (value of transferred property for the purpose of the estate tax) = $13,500.
26 C.F.R. §20.2012-1