26 USC 2106 - Taxable estate

Collapse to view only § 2106. Taxable estate

§ 2101. Tax imposed
§ 2102. Credits against tax
§ 2103. Definition of gross estate
§ 2104. Property within the United States
§ 2105. Property without the United States
§ 2106. Taxable estate
§ 2107. Expatriation to avoid tax
§ 2108. Application of pre-1967 estate tax provisions

§ 2101. Tax imposed

(a) Imposition

(b) Computation of taxThe 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.

(1) Adjusted taxable gifts defined

(2) Adjustment for certain gift tax

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89–809, title I, § 108(a), Nov. 13, 1966, 80 Stat. 1571; Pub. L. 94–455, title XX, § 2001(c)(1)(D), Oct. 4, 1976, 90 Stat. 1850; Pub. L. 100–647, title V, § 5032(a), (c), Nov. 10, 1988, 102 Stat. 3669; Pub. L. 101–239, title VII, § 7815(c), Dec. 19, 1989, 103 Stat. 2415; Pub. L. 103–66, title XIII, § 13208(b)(3), Aug. 10, 1993, 107 Stat. 469; Pub. L. 107–147, title IV, § 411(g)(2), Mar. 9, 2002, 116 Stat. 46.)

§ 2102. Credits against tax

(a) In general

(b) Unified credit

(1) In general

(2) Residents of possessions of the United States

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) Special rules

(A) Coordination with treaties

(B) Coordination with gift tax unified credit

(4) Limitation based on amount of tax

(5) Application of other credits

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89–809, title I, § 108(b), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 94–455, title XX, § 2001(c)(1)(E)(i), Oct. 4, 1976, 90 Stat. 1851; Pub. L. 100–647, title V, § 5032(b), Nov. 10, 1988, 102 Stat. 3669; Pub. L. 104–188, title I, § 1704(f)(1), Aug. 20, 1996, 110 Stat. 1879; Pub. L. 105–34, title V, § 501(a)(1)(E), Aug. 5, 1997, 111 Stat. 845; Pub. L. 107–16, title V, § 532(c)(7), June 7, 2001, 115 Stat. 75.)

§ 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.

(Aug. 16, 1954, ch. 736, 68A Stat. 397.)

§ 2104. Property within the United States

(a) Stock in corporation

(b) Revocable transfers and transfers within 3 years of death

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,

owned and held by a nonresident not a citizen of the United States shall be deemed property within the United States. Deposits with a domestic branch of a foreign corporation, if such branch is engaged in the commercial banking business, shall, for purposes of this subchapter, be deemed property within the United States. This subsection shall not apply to a debt obligation to which section 2105(b) applies.

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89–809, title I, § 108(c), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 91–172, title IV, § 435(b), Dec. 30, 1969, 83 Stat. 625; Pub. L. 93–17, § 3(a)(1), Apr. 10, 1973, 87 Stat. 12; Pub. L. 93–625, § 9(b), Jan. 3, 1975, 88 Stat. 2116; Pub. L. 94–455, title XX, § 2001(c)(1)(L), Oct. 4, 1976, 90 Stat. 1853; Pub. L. 100–647, title I, § 1012(q)(11), Nov. 10, 1988, 102 Stat. 3525; Pub. L. 104–188, title I, § 1704(t)(38), Aug. 20, 1996, 110 Stat. 1889; Pub. L. 111–226, title II, § 217(c)(3), Aug. 10, 2010, 124 Stat. 2402; Pub. L. 113–295, div. A, title II, § 221(a)(98), Dec. 19, 2014, 128 Stat. 4051.)

§ 2105. Property without the United States

(a) Proceeds of life insurance

(b) Bank deposits and certain other debt obligations

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.

Notwithstanding the preceding sentence, if any portion of the interest on an obligation referred to in paragraph (3) would not be eligible for the exemption referred to in paragraph (3) by reason of section 871(h)(4) if the interest were received by the decedent at the time of his death, then an appropriate portion (as determined in a manner prescribed by the Secretary) of the value (as determined for purposes of this chapter) of such debt obligation shall be deemed property within the United States.

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) Stock in a RIC

(1) In general

(2) Qualifying assets

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

(3) Termination

(Aug. 16, 1954, ch. 736, 68A Stat. 397; Pub. L. 89–809, title I, § 108(d), Nov. 13, 1966, 80 Stat. 1572; Pub. L. 98–369, div. A, title I, § 127(d), July 18, 1984, 98 Stat. 651; Pub. L. 100–647, title I, § 1012(g)(4), Nov. 10, 1988, 102 Stat. 3501; Pub. L. 103–66, title XIII, § 13237(b), Aug. 10, 1993, 107 Stat. 508; Pub. L. 105–34, title XIII, § 1304(a), Aug. 5, 1997, 111 Stat. 1040; Pub. L. 108–357, title IV, § 411(b), Oct. 22, 2004, 118 Stat. 1504; Pub. L. 110–343, div. C, title II, § 207(a), Oct. 3, 2008, 122 Stat. 3865; Pub. L. 111–312, title VII, § 726(a), Dec. 17, 2010, 124 Stat. 3316.)

§ 2106. Taxable estate

(a) Definition of taxable estate

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) Expenses, losses, indebtedness, and taxes

(2) Transfers for public, charitable, and religious uses

(A) In general

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) Powers of appointment

(D) Limitation on deduction

(E) Disallowance of deductions in certain cases

(F) Cross references

(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) Marital deduction

(4) State death taxes

(b) Condition of allowance of deductions

(Aug. 16, 1954, ch. 736, 68A Stat. 398; Pub. L. 85–866, title I, § 30(d), Sept. 2, 1958, 72 Stat. 1631;

§ 2107. Expatriation to avoid tax

(a) Treatment of expatriates

(b) Gross estateFor 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,

then that proportion of the fair market value of the stock of such foreign corporation owned (within the meaning of section 958(a)) by such decedent at the time of his death, which the fair market value of any assets owned by such foreign corporation and situated in the United States, at the time of his death, bears to the total fair market value of all assets owned by such foreign corporation at the time of his death, shall be included in the gross estate of such decedent. For purposes of the preceding sentence, a decedent shall be treated as owning stock of a foreign corporation at the time of his death if, at the time of a transfer, by trust or otherwise, within the meaning of sections 2035 to 2038, inclusive, he owned such stock.

(1) Unified credit

(A) In general

(B) Limitation based on amount of tax

(2) Credit for foreign death taxes

(A) In general

(B) Limitation on creditThe 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.

(3) Other credits

(d) Burden of proof

(e) Cross reference

(Added Pub. L. 89–809, title I, § 108(f), Nov. 13, 1966, 80 Stat. 1573; amended Pub. L. 94–455, title XIX, §§ 1902(a)(6), 1906(b)(13)(A), title XX, § 2001(c)(1)(E)(ii), Oct. 4, 1976, 90 Stat. 1805, 1834, 1851; Pub. L. 104–191, title V, § 511(e)(1), (f)(2)(A), Aug. 21, 1996, 110 Stat. 2097, 2099; Pub. L. 105–34, title XVI, § 1602(g)(6), Aug. 5, 1997, 111 Stat. 1095; Pub. L. 107–16, title V, § 532(c)(7)(C), June 7, 2001, 115 Stat. 75; Pub. L. 108–357, title VIII, § 804(a)(3), Oct. 22, 2004, 118 Stat. 1570.)

§ 2108. Application of pre-1967 estate tax provisions

(a) Imposition of more burdensome tax by foreign country

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,

the President 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 amendments made to sections 2101 (relating to tax imposed), 2102 (relating to credits against tax), 2106 (relating to taxable estate), and 6018 (relating to estate tax returns) on or after November 13, 1966.

(b) Alleviation of more burdensome tax

(d) Implementation by regulations

(Added Pub. L. 89–809, title I, § 108(f), Nov. 13, 1966, 80 Stat. 1573; amended Pub. L. 94–455, title XIX, §§ 1902(a)(6), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1805, 1834.)