Section 20.2013-6 - ExamplesThe application of §§ 20.2013-1 to 20.2013-5 may be further illustrated by the following examples:
Example (1).(a) A died December 1, 1953, leaving a gross estate of $1,000,000. Expenses, indebtedness, etc., amounted to $90,000. A bequeathed $200,000 to B, his wife, $100,000 of which qualified for the marital deduction. B died November 1, 1954, leaving a gross estate of $500,000. Expenses, indebtedness, etc., amounted to $40,000. B bequeathed $150,000 to charity. A and B were both citizens of the United States. The estates of A and B both paid State death taxes equal to the maximum credit allowable for State death taxes. Death taxes were not a charge on the bequest to B. (b) "First limitation" on credit for B's estate (§ 20.2013-2 ): | A's gross estate | $1,000,000.00 |
| Expenses, indebtedness, etc. | 90,000.00 |
| A's adjusted gross estate | 910,000.00 |
| Marital deduction | $100,000.00 | |
| Exemption | 60,000.00 | |
| | 160,000.00 |
| A's taxable estate | 750,000.00 |
| A's gross estate tax | 233,200.00 |
| Credit for State death taxes | 23,280.00 |
| A's net estate tax payable | 209,920.00 |
| "First limitation" = $209,920.00 (§ 20.2013-2(b) ) * [($200,000.00 - $100,000.00) (§ 20.2013-4 ) ÷ ($750,000.00 - $209,920.00 - $23,280.00 + $60,000.00) (§ 20.2013-2(c) )] | | $36,393.90 |
(c) "Second limitation" on credit for B's estate (§ 20.2013-3 ): (1) B's net estate tax payable as described in § 20.2013-3(a)(1) (previously taxed transfer included): | B's gross estate | $500,000.00 | |
| Expenses, indebtedness, etc. | $40,000.00 | |
| Charitable deduction | 150,000.00 | |
| Exemption | 60,000.00 | |
| | 250,000.00 |
| B's taxable estate | | 250,000.00 |
| B's gross estate tax | $65,700.00 |
| Credit for State death taxes | 3,920.00 |
| B's net estate tax payable | 61,780.00 |
(2) B's net estate tax payable as described in § 20.2013-3(a)(2) (previously taxed transfer excluded): | B's gross estate | | $400,000.00 |
| Expenses, indebtedness, etc | $40,000.00 | |
| Charitable deduction (§ 20.2013-3(b) ) = $150,000.00 - [$150,000.00 * ($200,000.00 - $100,000.00 ÷ $500,000.00 - $40,000.00)] | 117,391.30 | |
| Exemption | 60,000.00 | |
| | 217,391.30 |
| B's taxable estate | 182,608.70 |
| B's gross estate tax | 45,482.61 |
| Credit for State death taxes | 2,221.61 |
| B's net estate tax payable | 43,260.00 |
(3) "Second limitation": | Subparagraph (1) | $61,780.00 | |
| Less: Subparagraph (2) | 43,260.00 | |
| | $18,520.00 |
(d) Credit of B's estate for tax on prior transfers (§ 20.2013-1(c) ): | Credit for tax on prior transfers = $18,520.00 (lower of paragraphs (b) and (c)) * 100 percent (percentage to be taken into account under § 20.2013-1(c) ) | $18,520.00 |
Example (2).(a) The facts are the same as those contained in example (1) of this paragraph with the following additions. C died December 1, 1950, leaving a gross estate of $250,000. Expenses, indebtedness, etc., amounted to $50,000. C bequeathed $50,000 to B. C was a citizen of the United States. His estate paid State death taxes equal to the maximum credit allowable for State death taxes. Death taxes were not a charge on the bequest to B. (b) "First limitation" on credit for B's estate (§ 20.2013-2(d) )- (1) With respect to the property received from A: "First limitation" = $36,393.90 (this computation is identical with the one contained in paragraph (b) of example (1) of this section).
(2) With respect to the property received from C: | C's gross estate | | $250,000.00 |
| Expenses, indebtedness, etc. | $50,000.00 | |
| Exemption | $60,000.00 | |
| | $110,000.00 |
| C's taxable estate | | 140,000.00 |
| C's gross estate tax | | 32,700.00 |
| Credit for State death taxes | | 1,200.00 |
| C's net estate tax payable | | 31,500.00 |
| "First limitation" = $31,500.00 (§ 20.2013-2(b) ) * [$50,000.00 (§ 20.2013-4 ) ÷ ($140,000.00 - $31,500.00 - $1,200.00 + $60,000.00) (§ 20.2013-2(c) )] | $9,414.23 |
(c) "Second limitation" on credit for B's estate (§ 20.2013-3(c) ): (1) B's net estate tax payable as described in § 20.2013-3(a)(1) (previously taxed transfers included) = $61,780.00 (this computation is identical with the one contained in paragraph (c)(1) of example (1) of this section). (2) B's net estate tax payable as described in § 20.2013-3(a)(2) (previously taxed transfers excluded): | B's gross estate | $350,000.00 |
| Expenses, indebtedness, etc | $40,000.00 | |
| Charitable deduction (§ 20.2013-3(b) ) = $150,000.00 - [$150,000.00 * ($200,000.00 - $100,000.00 + $50,000.00) ÷ ($500,000.00 - $40,000.00)] | 101,086.96 | |
| Exemption | 60,000.00 | |
| 201,086.96 |
| B's taxable estate | | 148,913.04 |
| B's gross estate tax | | 35,373.91 |
| Credit for State death taxes | | 1,413.91 |
| B's net estate tax payable | | 33,960.00 |
(3) "Second limitation": | Subparagraph (1) | $61,780.00 | |
| Less: Subparagraph (2) | 33,960.00 | |
| | $27,820.00 |
(4) Apportionment of "second limitation" on credit: | Transfer from A (§ 20.2013-4 ) | $100,000.00 |
| Transfer from C (§ 20.2013-4 ) | 50,000.00 |
| Total | 150,000.00 |
| Portion of "second limitation" attributable to transfer from A (100/150 of $27,820.00) | 18,546.67 |
| Portion of "second limitation" attributable to transfer from C (50/150 of $27,820.00) | 9,273.33 |
(d) Credit of B's estate for tax on prior transfers (§ 20.2013-1(c) ): | Credit for tax on transfer from A= | |
| $18,546.67 (lower of "first limitation" computed in paragraph (b)(1) and "second limitation" apportioned to A's transfer in paragraph (c)(4)) * 100 percent (percentage to be taken into account under § 20.2013-1(c) ) | $18,546.67 |
| Credit for tax on transfer from C= | |
| $9,273.33 (lower of "first limitation" computed in paragraph (b)(2) and "second limitation" apportioned to B's transfer in paragraph (c)(4)) * 80 percent (percentage to be taken into account under § 20.2013-1(c) ) | 7,418.66 |
| Total credit for tax on prior transfers | 25,965.33 |