The application of Sec. Sec. 20.2013-1 to 20.2013-5 may be further illustrated by the following examples:
(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 (Sec. 20.2013-2): A's gross estate....................................... $1,000,000.00Expenses, indebtedness, etc............................ 90,000.00
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A's adjusted gross estate........................... 910,000.00Marital deduction..................... $100,000.00Exemption............................. 60,000.00
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............... 160,000.00
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A's taxable estate.................................. 750,000.00
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A's gross estate tax................................ 233,200.00Credit for State death taxes........................... 23,280.00
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A's net estate tax payable.......................... 209,920.00
================``First limitation'' = $209,920.00 ............... $36,393.90
(Sec. 20.2013-2(b)) x [($200,000.00
- $100,000.00) (Sec. 20.2013-4) /
($750,000.00 - $209,920.00 -
$23,280.00 + $60,000.00) (Sec.
20.2013-2(c))].......................
(c) ``Second limitation'' on credit for B's estate (Sec. 20.2013-3):
(1) B's net estate tax payable as described in Sec. 20.2013-3(a)(1) (previously taxed transfer included): B's gross estate.............................. $500,000.00Expenses, indebtedness, etc................... $40,000.00Charitable deduction.......................... 150,000.00Exemption..................................... 60,000.00
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........... 250,000.00
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B's taxable estate......................... ........... 250,000.00
============B's gross estate tax....................................... $65,700.00Credit for State death taxes............................... 3,920.00
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B's net estate tax payable.............................. 61,780.00
(2) B's net estate tax payable as described in Sec. 20.2013-3(a)(2) (previously taxed transfer excluded): B's gross estate.............................. ........... $400,000.00Expenses, indebtedness, etc................... $40,000.00Charitable deduction (Sec. 20.2013- 117,391.30
3(b))=$150,000.00 - [$150,000.00 x
($200,000.00 - $100,000.00 / $500,000.00 -
$40,000.00)].................................Exemption..................................... 60,000.00
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........... 217,391.30
------------B's taxable estate......................................... 182,608.70
==============B's gross estate tax....................................... 45,482.61Credit for State death taxes............................... 2,221.61
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B's net estate tax payable.............................. 43,260.00
============
(3) ``Second limitation'': Subparagraph (1).............................. $61,780.00Less: Subparagraph (2)........................ 43,260.00
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........... $18,520.00
(d) Credit of B's estate for tax on prior transfers (Sec. 20.2013-1(c)): Credit for tax on prior transfers=$18,520.00 (lower of $18,520.00
paragraphs (b) and (c))x100 percent (percentage to be taken
into account under Sec. 20.2013-1(c))....................
(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 (Sec. 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.............................. ........... $250,000.00Expenses, indebtedness, etc................... $50,000.00Exemption..................................... $60,000.00
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........... $110,000.00
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C's taxable estate......................... ........... 140,000.00
============
C's gross estate tax.......................... ........... 32,700.00Credit for State death taxes.................. ........... 1,200.00
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C's net estate tax payable................. ........... 31,500.00
============``First limitation'' = $31,500.00 (Sec. 20.2013-2(b)) x $9,414.23
[$50,000.00 (Sec. 20.2013-4) / ($140,000.00 - $31,500.00
- $1,200.00 + $60,000.00) (Sec. 20.2013-2(c))]..........
(c) ``Second limitation'' on credit for B's estate (Sec. 20.2013-3(c)):
(1) B's net estate tax payable as described in Sec. 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 Sec. 20.2013-3(a)(2) (previously taxed transfers excluded): B's gross estate........................................... $350,000.00Expenses, indebtedness, etc................... $40,000.00Charitable deduction (Sec. 20.2013-3(b)) = 101,086.96
$150,000.00 - [$150,000.00 x ($200,000.00 -
$100,000.00 + $50,000.00) / ($500,000.00 -
$40,000.00)].................................Exemption..................................... 60,000.00
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201,086.96
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B's taxable estate......................... ........... 148,913.04
------------B's gross estate tax.......................... ........... 35,373.91Credit for State death taxes.................. ........... 1,413.91
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B's net estate tax payable................. ........... 33,960.00
============
(3) ``Second limitation'': Subparagraph (1).............................. $61,780.00Less: Subparagraph (2)........................ 33,960.00
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........... $27,820.00
(4) Apportionment of ``second limitation'' on credit: Transfer from A (Sec. 20.2013-4)......................... $100,000.00Transfer from C (Sec. 20.2013-4)......................... 50,000.00
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Total................................................... 150,000.00Portion of ``second limitation'' attributable to transfer 18,546.67
from A (100/150 of $27,820.00)............................Portion of ``second limitation'' attributable to transfer 9,273.33
from C (50/150 of $27,820.00).............................
(d) Credit of B's estate for tax on prior transfers (Sec. 20.2013-1(c)): Credit for tax on transfer from A=
$18,546.67 (lower of ``first limitation'' computed in $18,546.67
paragraph (b)(1) and ``second limitation'' apportioned to
A's transfer in paragraph (c)(4)) x 100 percent
(percentage to be taken into account under Sec. 20.2013-
1(c))....................................................Credit for tax on transfer from C=
$9,273.33 (lower of ``first limitation'' computed in 7,418.66
paragraph (b)(2) and ``second limitation'' apportioned to
B's transfer in paragraph (c)(4)) x 80 percent
(percentage to be taken into account under Sec. 20.2013-
1(c))....................................................
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Total credit for tax on prior transfers................... 25,965.33