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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) Proof of credit

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 proper ty in respect of which such taxes are imposed, and

(4) all other information necessary for the verification and computation of the credit. (e) Period of limitation

The credit provided in this section shall be al. lowed 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 exten

sion. Refund based on such credit may (despite the provisions of sections 6511 and 6512) be made if claim therefor is filed within the period above provided. Any such refund shall be made without interest. (f) Additional limitation in cases involving a deduc

tion under section 2053(d) 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) Possession of United States deemed a foreign

country For purposes of the credits authorized by this section, each possession of the United States shall be deemed to be a foreign country. (h) Similar credit required for certain alien residents 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 resi.

dent 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, the President shall proclaim that, in the case of citizens or subjects of such foreign country dying while the proclamation remains in effect, the credit under subsection (a) shall be allowed only if such foreign country allows such a similar credit in the case of citizens of the United States resident in such foreign country at the time of death. (Aug. 16, 1954, ch. 736, 68A Stat. 378; Sept. 2, 1958, Pub. L. 85-866, title I, § 102(c)(2), 72 Stat. 1674; Aug. 21, 1959, Pub. L. 86-175, § 2, 73 Stat. 397; Nov. 13, 1966, Pub. L. 89-809, title I, & 106(b)(3), 80 Stat. 1570: Oct. 4. 1976. Pub. L. 94-455. title XIX. $ 1906(b)(13)(A), title XX, $ 2001(c)(1)G), 90 Stat. 1834, 1852.)

AMENDMENTS 1976–Subsec. (b)(2). Pub. L. 94-455, $ 2001(c)(1)(G), added reference to section 2010 in the provisions preceding subpar. (A).

Subsecs. (c), (d). Pub. L. 94-455, $ 1906(b)(13)(A), struck out "or his delegate" following "Secretary".

1966–Subsec. (a). Pub. L. 89-809 struck out provi. sion that, if the decedent at the time of his death was not a citizen of the United States, credit would not be allowed under this section unless the foreign country of which the decedent was a citizen or subject, in imposing estate, inheritance, legacy, or succession taxes, allows a similar credit in the case of a citizen of the United States resident in such country. Subsec. (h). Pub. L. 89-809 added subsec. (h).

1959–Subsecs. (f), (g). Pub. L. 86-175 added subsec. (f) and redesignated former subsec. (f) as (g). 1958–Subsec. (f). Pub. L. 85-866 added subsec. (f).

EFFECTIVE DATE OF 1966 AMENDMENT Amendment by section 106(b)(3) of Pub. L. 89-809 applicable with respect to estates of decedents dying after Nov. 13, 1966, see section 106(b)(4) of Pub. L. 89-809, set out as a note under section 901 of this title.

ETTECTIVE DATE OF 1959 AMENDMENT Amendment by Pub. L. 86–175 applicable with respect to estates of decedents dying on or after July 1, 1955, see section 4 of Pub. L. 86–175, set out as a note under section 2063 of this title.

EFFECTIVE DATE OF 1958 AMENDMENT Subsec. (1) applicable to estates of decedents dying after Sept. 2, 1958, see section 102(d) of Pub. L. 85-866, set out as a note under section 2011 of this title.

CROSS REFERENCES Limitation on credit or refund, see section 6511 of this title.

SECTION REFERRED TO IN OTHER SECTIONS this section is referred to in sections 2013, 2015, 2016, 2053, 6511, 6612 of this title.

8 2015. Credit for death taxes on remainders

AMENDMENTS Where an election is made under section

1976–Pub. L. 94-455 struck out “Territory or" fol.

lowing “any State, any" and “or his delegate" follow6163(a) to postpone payment of the tax im

ing "Secretary”. posed by section 2001, or 2101, such part of any estate, inheritance, legacy, or succession taxes

SECTION REFERRED TO IN OTHER SECTIONS allowable as a credit under section 2011 or 2014, as is attributable to a reversionary or remain

This section is referred to in sections 6040, 6213,

6501 of this title. der interest may be allowed as a credit against the tax attributable to such interest, subject to

CROSS REFERENCES the limitations on the amount of the credit con

Limitations on assessment and collection, see section tained in such sections, if such part is paid, and

6501 of this title. credit therefor claimed, at any time before the expiration of the time for payment of the tax

PART III-GROSS ESTATE imposed by section 2001 or 2101 as postponed and extended under section 6163.

Sec.

2031 Definition of gross estate. (Aug. 16, 1954, ch. 736, 68A Stat. 379; Sept. 2, 2032.

Alternate valuation. 1958, Pub. L. 85-866, title I, § 66(a)(1), 72 Stat. 2032A. Valuation of certain farm, etc., real property. 1657.)

2033. Property in which the decedent had an inter

est. AMENDMENTS

2034.

Dower or curtesy interests. 1958-Pub. L. 85-866 substituted “the time for pay. 2035. Adjustments for gifts made within 3 years of ment of the tax imposed by section 2001 or 2101 as

decedent's death. postponed and extended under section 6163" for "60

2036. Transfers with retained life estate. days after the termination of the precedent interest or

2037. Transfers taking effect at death. interests in the property".

2038. Revocable transfers.

2039. Annuities. EFFECTIVE DATE OF 1958 AMENDMENT

2040. Joint interests. Section 66(a)(3) of Pub. L. 85-866 provided that:

2041. Powers of appointment.

2042. "The amendments made by paragraphs (1) and (2)

Proceeds of life insurance.

2043. (amending this section and section 927 of I.R.C. 1939)

Transfers for insufficient consideration. shall apply in the case of any reversionary or remain

2044. Certain property for which marital deducder interest in property only if the precedent interest

tion was previously allowed. or interests in the property did not terminate before

2045. Prior interests. the beginning of the 60-day period which ends on the

2046. Disclaimers. date of the enactment of this Act (Sept. 2, 1958)."

AMENDMENTS
CROSS REFERENCES

1981-Pub. L. 97-34, title IV, $ 403(d)(3)(A)(ii), Aug. Limitation on credit or refund, see section 6511 of 13, 1981, 95 Stat. 304, added item 2044 and redesignat. this title.

ed former items 2044 and 2045 as items 2045 and 2046,

respectively. SECTION REFERRED TO IN OTHER SECTIONS

1976--Pub. L. 94-455, title xx, 88 2001(c)(1)(N)(iii), This section is referred to in section 6511 of this

2003(d)(1), 2009(b)(3)(B), Oct. 4, 1976, 90 Stat. 1853, title.

1862, 1894, added items 2032A and 2045 and substitut

ed “Adjustments for gifts made within 3 years of dece8 2016. Recovery of taxes claimed as credit

dent's death" for “Transactions in contemplation of

death" in item 2035. If any tax claimed as a credit under section 2011 or 2014 is recovered from any foreign 8 2031. Definition of gross estate country, any State, any possession of the United States, or the District of Columbia, the (a) Gener

(a) General executor, or any other person or persons recov The value of the gross estate of the decedent ering such amount, shall give notice of such re. shall be determined by including to the extent covery to the Secretary at such time and in provided for in this part, the value at the time such manner as may be required by regulations of his death of all property, real or personal, prescribed by him, and the Secretary shall (de- tangible or intangible, wherever situated. spite the provisions of section 6501) redetermine the amount of the tax under this chapter

(b) Valuation of unlisted stock and securities and the amount, if any, of the tax due on such

In the case of stock and securities of a corporedetermination, shall be paid by the executor ration the value of which, by reason of their or such person or persons, as the case may be, not being listed on an exchange and by reason on notice and demand. No interest shall be as of the absence of sales thereof, cannot be detersessed or collected on any amount of tax due on mined with reference to bid and asked prices or any redetermination by the Secretary resulting with reference to sales prices, the value thereof from a refund to the executor of tax claimed as shall be determined by taking into consideraa credit under section 2014, for any period tion, in addition to all other factors, the value before the receipt of such refund, except to the of stock or securities of corporations engaged in extent interest was paid by the foreign country the same or a similar line of business which are on such refund.

listed on an exchange. (Aug. 16, 1954, ch. 736, 68A Stat. 380; Oct. 4, (c) Cross reference 1976, Pub. L. 94-455, title XIX,

For executor's right to be furnished on request a state$$ 1902(a)(12)(C), 1906(b)(13)(A), 90 Stat. 1806,

ment regarding any valuation made by the Secretary 1834.)

within the gross estate, see section 7517.

(Aug. 16, 1954, ch. 736, 68A Stat. 380; Oct. 16, 1962, Pub. L. 87-834, § 18(a)(1), 76 Stat. 1052; Oct. 4, 1976, Pub. L. 94-455, title XX, $ 2008(a)(2)(A), 90 Stat. 1891.)

AMENDMENTS 1976–Subsec. (c). Pub. L. 94-455 added subsec. (c).

1962–Subsec. (a). Pub. L. 87-834 eliminated provisions which excepted real property situated outside the United States.

EFFECTIVE DATE OF 1962 AMENDMENT Section 18(b) of Pub. L. 87-834 provided that: (1) Except as provided in paragraph (2), the amend.

d. ments made by subsection (a) (amending sections 2031, 2033, 2034, 2035, 2036, 2037, 2038, 2040, and 2041 of this title) shall apply to the estates of decedents dying after the date of the enactment of this Act (Oct. 16, 1962).

"(2) In the case of a decedent dying after the date of the enactment of this Act (Oct. 16, 1962) and before July 1, 1964, the value of real property situated outside of the United States shall not be included in the gross estate (as defined in section 2031(a)) of the decedent

"(A) under section 2033, 2034, 2035(a), 2036(a), 2037(a), or 2038(a) to the extent the real property, or the decedent's interest in it, was acquired by the decedent before February 1, 1962;

"(B) under section 2040 to the extent such property or interest was acquired by the decedent before February 1, 1962, or was held by the decedent and the survivor in a joint tenancy or tenancy by the entirety before February 1, 1962; or

(C) under section 2041(a) to the extent that before February 1, 1962, such property or interest was subject to a general power of appointment (as defined in section 2041) possessed by the decedent. In the case of real property, or an interest therein, situated outside of the United States (including a general power of appointment in respect of such property or interest, and including property held by the decedent and the survivor in a joint tenancy or tenancy by the entirety) which was acquired by the decedent after January 31, 1962, by gift within the meaning of section 2511, or from a prior decedent by devise or inheritance, or by reason of death, form of ownership, or other conditions (including the exercise or nonexercise of a power of appointment), for purposes of this para graph such property or interest therein shall be deemed to have been acquired by the decedent before February 1, 1962, if before that date the donor or prior decedent had acquired the property or his inter est therein or had possessed a power of appointment in respect of the property or interest."

CROSS REFERENCES Gross estate of nonresidents not citizens, see section 2103 of this title.

Taxable estate of nonresidents not citizens, see section 2106 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 2103 of this title; title 43 section 1620.

(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) Special rules

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, shall be valued as of the date of the decedent's death with adjustment for any difference in value (not due to mere lapse of time or the occurrence or nonoccurrence of a contingency) of the property as of the date 6 months after the decedent's death (substituting, in the case of property distributed by the executor or trustee, or sold, exchanged, or otherwise disposed of, during such 6-month period, the date thereof). (c) Time of election

The election provided for in this section shall be exercis be exercised by the executor on his return if filed within the time prescribed by law or before the expiration of any extension of time granted pursuant to law for the filing of the return. (Aug. 16. 1954. ch. 736. 68A Stat. 381; Dec. 31, 1970, Pub. L. 91-614, title I, § 101(a), 84 Stat. 1836.)

AMENDMENTS 1970–Pub. L. 91-614 substituted "6 months” for “1 year" in four places and substituted "6-month" for "1year".

8 2032. Alternate valuation (a) General

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 fol. lows:

(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.

EFFECTIVE DATE OF 1970 AMENDMENT Section 101(j) of Pub. L. 91-614 provided that: “The amendments made by this section (enacting section 6905 of this title, amending sections 1223, 2032, 2055, 2204, 6040, 6075, 6091, 6161, 6314, 6324, and 6504 of this title, and enacting provisions set out as notes under sections 2032, 2204, and 6905 of this title] (other than subsection (f)) (amending sections 2204 and 6905 of this title) shall apply with respect to decedents dying after December 31, 1970."

CROSS REFERENCES Basis of property acquired from a decedent, see section 1014 of this title.

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(1) General rule 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 re

ferred to in subsection (d)(2), then, for purposes of this chapter, the value of qualified real property shall be its value for the use under which it qualifies, under subsection (b), as qualified real property. (2) Limit on aggregate reduction in fair market

value 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 the applicable limit set forth in the following table:

The applicable In the case of decedents dying in:

limit is: 1981.

$600,000 1982..

700,000 1983 or thereafter ...............

750,000. (b) Qualified real property (1) In general

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

(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) Qualified use

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) Adjusted value

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) Decedents who are retired or disabled (A) In general

If, on the date of the decedent's death, the requirements of paragraph (1)(C)(ii) with respect to the decedent for any proper. ty 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, then paragraph (1)(C)(ii) shall be applied with respect to such property by substituting “the date on which the longer of such continuous periods began" for “the date of the decedent's death" in paragraph (1)(C). (B) Disabled defined

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) Coordination with recapture

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.

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

(5) Special rules for surviving spouses (A) In general

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) Special rule

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) Coordination with paragraph (4)

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 applica

tion of paragraph (4). (c) Tax treatment of dispositions and failures to use

for qualified use (1) Imposition of additional estate tax

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 de

cedent, then, there is hereby imposed an additional estate tax. (2) Amount of additional tax (A) In general

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 attributa. ble 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 de

termined under subsection (a). (B) Adjusted tax difference attributable to inter

est 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 re

spect 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) Adjusted tax difference with respect to the

estate 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) Partial dispositions

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) Special rule for disposition of timber

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

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