26 U.S.C. § 2053 — Expenses, indebtedness, and taxes

Page 2599 TITLE 26—INTERNAL REVENUE CODE § 2053 gross estate the deductions provided for in this part. (Aug. 16, 1954, ch. 736, 68A Stat. 388; Pub. L. 95–600, title VII, § 702(r)(2), Nov. 6, 1978, 92 Stat. 2938.) Editorial Notes AMENDMENTS 1978—Pub. L. 95–600 struck out ‘‘exemption and’’ after ‘‘gross estate the’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title VII, § 702(r)(5), Nov. 6, 1978, 92 Stat. 2939, provided that: ‘‘The amendments made by this subsection [amending this section and sections 1016, 6324B, and 6698A of this title] shall apply to es- tates of decedents dying after December 31, 1976.’’ [§ 2052. Repealed. Pub. L. 94–455, title XX, § 2001(a)(4), Oct. 4, 1976, 90 Stat. 1848] Section, act Aug. 16, 1954, ch. 736, 68A Stat. 389, pro- vided for an exemption of $60,000 to be deducted from gross estate in determining value of taxable estate. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to estates of decedents dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L. 94–455, set out as an Effective Date of 1976 Amendment note under section 2001 of this title. § 2053. Expenses, indebtedness, and taxes (a) General rule For purposes of the tax imposed by section 2001, the value of the taxable estate shall be de- termined by deducting from the value of the gross estate such amounts— (1) for funeral expenses, (2) for administration expenses, (3) for claims against the estate, and (4) for unpaid mortgages on, or any indebted- ness in respect of, property where the value of the decedent’s interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate, as are allowable by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered. (b) Other administration expenses Subject to the limitations in paragraph (1) of subsection (c), there shall be deducted in deter- mining the taxable estate amounts representing expenses incurred in administering property not subject to claims which is included in the gross estate to the same extent such amounts would be allowable as a deduction under subsection (a) if such property were subject to claims, and such amounts are paid before the expiration of the period of limitation for assessment provided in section 6501. (c) Limitations (1) Limitations applicable to subsections (a) and (b) (A) Consideration for claims The deduction allowed by this section in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded on a promise or agreement, be lim- ited to the extent that they were contracted bona fide and for an adequate and full con- sideration in money or money’s worth; ex- cept that in any case in which any such claim is founded on a promise or agreement of the decedent to make a contribution or gift to or for the use of any donee described in section 2055 for the purposes specified therein, the deduction for such claims shall not be so limited, but shall be limited to the extent that it would be allowable as a deduc- tion under section 2055 if such promise or agreement constituted a bequest. (B) Certain taxes Any income taxes on income received after the death of the decedent, or property taxes not accrued before his death, or any estate, succession, legacy, or inheritance taxes, shall not be deductible under this section. (C) Certain claims by remaindermen No deduction shall be allowed under this section for a claim against the estate by a remainderman relating to any property de- scribed in section 2044. (D) Section 6166 interest No deduction shall be allowed under this section for any interest payable under sec- tion 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166. (2) Limitations applicable only to subsection (a) In the case of the amounts described in sub- section (a), there shall be disallowed the amount by which the deductions specified therein exceed the value, at the time of the de- cedent’s death, of property subject to claims, except to the extent that such deductions rep- resent amounts paid before the date prescribed for the filing of the estate tax return. For pur- poses of this section, the term ‘‘property sub- ject to claims’’ means property includible in the gross estate of the decedent which, or the avails of which, would under the applicable law, bear the burden of the payment of such deductions in the final adjustment and settle- ment of the estate, except that the value of the property shall be reduced by the amount of the deduction under section 2054 attributable to such property. (d) Certain foreign death taxes (1) In general Notwithstanding the provisions of sub- section (c)(1)(B), for purposes of the tax im- posed by section 2001, the value of the taxable estate may be determined, if the executor so elects before the expiration of the period of limitation for assessment provided in section 6501, by deducting from the value of the gross estate the amount (as determined in accord- ance with regulations prescribed by the Sec- retary) of any estate, succession, legacy, or in- heritance tax imposed by and actually paid to any foreign country, in respect of any prop- Page 2600 TITLE 26—INTERNAL REVENUE CODE § 2053 erty situated within such foreign country and included in the gross estate of a citizen or resident of the United States, upon a transfer by the decedent for public, charitable, or reli- gious uses described in section 2055. The deter- mination under this paragraph of the country within which property is situated shall be made in accordance with the rules applicable under subchapter B (sec. 2101 and following) in determining whether property is situated within or without the United States. Any elec- tion under this paragraph shall be exercised in accordance with regulations prescribed by the Secretary. (2) Condition for allowance of deduction No deduction shall be allowed under para- graph (1) for a foreign death tax specified therein unless the decrease in the tax imposed by section 2001 which results from the deduc- tion provided in paragraph (1) will inure solely for the benefit of the public, charitable, or re- ligious transferees described in section 2055 or section 2106(a)(2). In any case where the tax imposed by section 2001 is equitably appor- tioned among all the transferees of property included in the gross estate, including those described in sections 2055 and 2106(a)(2) (taking into account any exemptions, credits, or de- ductions allowed by this chapter), in deter- mining such decrease, there shall be dis- regarded any decrease in the Federal estate tax which any transferees other than those de- scribed in sections 2055 and 2106(a)(2) are re- quired to pay. (3) Effect on credit for foreign death taxes of deduction under this subsection (A) Election An election under this subsection shall be deemed a waiver of the right to claim a cred- it, against the Federal estate tax, under a death tax convention with any foreign coun- try for any tax or portion thereof in respect of which a deduction is taken under this sub- section. (B) Cross reference See section 2014(f) for the effect of a deduction taken under this paragraph on the credit for foreign death taxes. (e) Marital rights For provisions treating certain relinquishments of marital rights as consideration in money or money’s worth, see section 2043(b)(2). (Aug. 16, 1954, ch. 736, 68A Stat. 389; Feb. 20, 1956, ch. 63, § 2, 70 Stat. 23; Pub. L. 85–866, title I, § 102(c)(3), Sept. 2, 1958, 72 Stat. 1674; Pub. L. 86–175, § 1, Aug. 21, 1959, 73 Stat. 396; Pub. L. 94–455, title XIX, §§ 1902(a)(12)(B), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1806, 1834; Pub. L. 98–369, div. A, title IV, § 425(a)(2), title X, § 1027(b), July 18, 1984, 98 Stat. 804, 1031; Pub. L. 100–647, title I, § 1011A(g)(11), Nov. 10, 1988, 102 Stat. 3482; Pub. L. 105–34, title V, § 503(b)(1), title X, § 1073(b)(3), Aug. 5, 1997, 111 Stat. 853, 948; Pub. L. 107–16, title V, § 532(c)(5), June 7, 2001, 115 Stat. 74; Pub. L. 107–134, title I, § 103(b)(2), Jan. 23, 2002, 115 Stat. 2431.) Editorial Notes AMENDMENTS 2002—Subsec. (d)(3)(B). Pub. L. 107–134 substituted ‘‘section 2011(d)’’ for ‘‘section 2011(e)’’. 2001—Subsec. (d). Pub. L. 107–16 substituted ‘‘Certain foreign death taxes’’ for ‘‘Certain State and foreign death taxes’’ in heading and amended text generally, revising and restating provisions of pars. (1) to (3) so as to eliminate provisions relating to deduction for State death taxes. 1997—Subsec. (c)(1)(B). Pub. L. 105–34, § 1073(b)(3), struck out at end ‘‘This subparagraph shall not apply to any increase in the tax imposed by this chapter by reason of section 4980A(d).’’ Subsec. (c)(1)(D). Pub. L. 105–34, § 503(b)(1), added sub- par. (D). 1988—Subsec. (c)(1)(B). Pub. L. 100–647, inserted at end ‘‘This subparagraph shall not apply to any increase in the tax imposed by this chapter by reason of section 4980A(d).’’ 1984—Subsec. (c)(1)(C). Pub. L. 98–369, § 1027(b), added subpar. (C). Subsec. (e). Pub. L. 98–369, § 425(a)(2), substituted ‘‘For provisions treating certain relinquishments of marital rights as consideration in money or money’s worth, see section 2043(b)(2)’’ for ‘‘For provisions that relinquish- ment of marital rights shall not be deemed a consider- ation ‘in money or money’s worth,’ see section 2043(b).’’ 1976—Subsec. (d)(1). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ in provisions preceding subpar. (A) and following subpar. (B) and struck out ‘‘or Territory’’ after ‘‘a State’’ in subpar. (A). 1959—Subsec. (d). Pub. L. 86–175 inserted a reference to foreign death taxes in heading of subsection and par. (3) and in text of par. (2), redesignated provisions of par. (1) as par. (1)(A) and sentence pertaining to exer- cise of privilege of election, added par. (2) and sentence for determining location of property, redesignated pro- visions of par. (3) as par. (3)(B) in part, and added par. (3)(A) and the part of (B) relating to foreign death taxes. 1958—Subsec. (d)(1). Pub. L. 85–866 struck out ‘‘or any possession of the United States,’’ after ‘‘District of Co- lumbia,’’. 1956—Subsecs. (d), (e). Act Feb. 20, 1956, added subsec. (d) and redesignated former subsec. (d) as (e). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2002 AMENDMENT Pub. L. 107–134, title I, § 103(d), Jan. 23, 2002, 115 Stat. 2431, provided that: ‘‘(1) EFFECTIVE DATE.—The amendments made by this section [amending this section and sections 2011 and 2201 of this title] shall apply to estates of decedents— ‘‘(A) dying on or after September 11, 2001; and ‘‘(B) in the case of individuals dying as a result of the April 19, 1995, terrorist attack, dying on or after April 19, 1995. ‘‘(2) WAIVER OF LIMITATIONS.—If refund or credit of any overpayment of tax resulting from the amend- ments made by this section is prevented at any time before the close of the 1-year period beginning on the date of the enactment of this Act [Jan. 23, 2002] by the operation of any law or rule of law (including res judi- cata), such refund or credit may nevertheless be made or allowed if claim therefor is filed before the close of such period.’’ EFFECTIVE DATE OF 2001 AMENDMENT Amendment by Pub. L. 107–16 applicable to estates of decedents dying, and generation-skipping transfers, after Dec. 31, 2004, see section 532(d) of Pub. L. 107–16, set out as a note under section 2012 of this title. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by section 503(b)(1) of Pub. L. 105–34 ap- plicable to estates of decedents dying after Dec. 31, Page 2601 TITLE 26—INTERNAL REVENUE CODE § 2055 1997, with special rule in case of estate of any decedent dying before Jan. 1, 1998, with respect to which there is an election under section 6166 of this title, see section 503(d) of Pub. L. 105–34, set out as a note under section 163 of this title. Amendment by section 1073(b)(3) of Pub. L. 105–34 ap- plicable to estates of decedents dying after Dec. 31, 1996, see section 1073(c) of Pub. L. 105–34, set out as an Effective Date of Repeal note under section 4980A of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 425(a)(2) of Pub. L. 98–369 ap- plicable to estates of decedents dying after July 18, 1984, see section 425(c)(1) of Pub. L. 98–369, set out as a note under section 2043 of this title. Pub. L. 98–369, div. A, title X, § 1027(c), July 18, 1984, 98 Stat. 1032, provided that: ‘‘The amendments made by this section [amending this section and section 2056 of this title] shall take effect as if included in the amend- ment made by section 403 of the Economic Recovery Tax Act of 1981 [section 403 of Pub. L. 97–34, see Effec- tive Date of 1981 Amendment note set out under section 2056 of this title].’’ EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1902(a)(12)(B) of Pub. L. 94–455 applicable to estates of decedents dying after Oct. 4, 1976, see section 1902(c)(1) of Pub. L. 94–455, set out as a note under section 2012 of this title. EFFECTIVE DATE OF 1959 AMENDMENT Pub. L. 86–175, § 4, Aug. 21, 1959, 73 Stat. 397, provided that: ‘‘The amendments made by the preceding sections of this Act [amending this section and sections 2011 and 2014 of this title] shall apply with respect to the estates of decedents dying on or after July 1, 1955.’’ EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–866 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 2014 of this title. EFFECTIVE DATE OF 1956 AMENDMENT Act Feb. 20, 1956, ch. 63, § 4, 70 Stat. 25, as amended by act Oct. 22, 1986, Pub. L. 99–514, § 2, 100 Stat. 2095, pro- vided that: ‘‘The amendments to the Internal Revenue Code of 1986 [formerly I.R.C. 1954] made by sections 2 and 3 of this Act [amending this section and section 2011 of this title], and provisions having the same effect as this amendment, which shall be considered to be in- cluded in chapter 3 of the Internal Revenue Code of 1939, shall apply to the estates of all decedents dying after December 31, 1953.’’ § 2054. Losses For purposes of the tax imposed by section 2001, the value of the taxable estate shall be de- termined by deducting from the value of the gross estate losses incurred during the settle- ment of estates arising from fires, storms, ship- wrecks, or other casualties, or from theft, when such losses are not compensated for by insur- ance or otherwise. (Aug. 16, 1954, ch. 736, 68A Stat. 390.) § 2055. Transfers for public, charitable, and reli- gious uses (a) In general For purposes of the tax imposed by section 2001, the value of the taxable estate shall be de- termined by deducting from the value of the gross estate the amount of all bequests, leg- acies, devises, or transfers— (1) to or for the use of the United States, any State, any political subdivision thereof, or the District of Columbia, for exclusively public purposes; (2) to or for the use of any corporation orga- nized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic fa- cilities or equipment), 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 sec- tion 501(c)(3) by reason of attempting to influ- ence legislation, and which does not partici- pate in, or intervene in (including the pub- lishing or distributing of statements), any po- litical campaign on behalf of (or in opposition to) any candidate for public office; (3) to a trustee or trustees, or a fraternal so- ciety, order, or association operating under the lodge system, but only if such contribu- tions or gifts are to be used by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, chari- table, scientific, literary, or educational pur- poses, or for the prevention of cruelty to chil- dren 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 partici- pate in, or intervene in (including the pub- lishing or distributing of statements), any po- litical campaign on behalf of (or in opposition to) any candidate for public office; (4) to or for the use of any veterans’ organi- zation incorporated by Act of Congress, or of its departments or local chapters or posts, no part of the net earnings of which inures to the benefit of any private shareholder or indi- vidual; or (5) to an employee stock ownership plan if such transfer qualifies as a qualified gratu- itous transfer of qualified employer securities within the meaning of section 664(g). For purposes of this subsection, the complete termination before the date prescribed for the filing of the estate tax return of a power to con- sume, invade, or appropriate property for the benefit of an individual before such power has been exercised by reason of the death of such in- dividual or for any other reason shall be consid- ered and deemed to be a qualified disclaimer with the same full force and effect as though he had filed such qualified disclaimer. Rules simi- lar to the rules of section 501(j) shall apply for purposes of paragraph (2).