ESTATE TAX
§ 2001. Imposition and rate of tax
(a) Imposition.–A tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.(b) Computation of tax.–The tax imposed by this section shall be the amount equal to the excess (if any) of-
(1) a tentative tax computed under subsection (c) on the sum of–
(A) the amount of the taxable estate, and
(B) the amount of the adjusted taxable gifts, over
(2) the aggregate amount of tax which would have been payable under chapter 12 with respect to gifts made by the decedent after December 31, 1976, if the provisions of subsection (c) (as in effect at the decedent’s death) had been applicable at the time of such gifts.
For purposes of paragraph (1)(B), the term “adjusted taxable gifts” means the total amount of the taxable gifts (within the meaning of section 2503) made by the decedent after December 31, 1976, other than gifts which are includible in the gross estate of the decedent.
(c) Rate schedule.–
(1) In general.–
If the amount with respect to which the tentative tax to be computed is:
The tentative tax is:
Not over $10,000
18 percent of such amount.
Over $10,000 but not over $20,000
$1,800, plus 20 percent of the excess of such amount over $10,000.
Over $20,000 but not over $40,000
$3,800, plus 22 percent of the excess of such amount over $20,000.
Over $40,000 but not over $60,000
$8,200, plus 24 percent of the excess of such amount over $40,000.
Over $60,000 but not over $80,000
$13,000, plus 26 percent of the excess of such amount over $60,000.
Over $80,000 but not over $100,000
$18,200, plus 28 percent of the excess of such amount over $80,000.
Over $100,000 but not over $150,000
$23,800, plus 30 percent of the excess of such amount over $100,000.
Over $150,000 but not over $250,000
$38,800, plus 32 percent of the excess of such amount over $150,000.
Over $250,000 but not over $500,000
$70,800, plus 34 percent of the excess of such amount over $250,000.
Over $500,000 but not over $750,000
$155,800, plus 37 percent of the excess of such amount over $500,000.
Over $750,000 but not over $1,000,000
$248,300, plus 39 percent of the excess of such amount over $750,000.
Over $1,000,000 but not over $1,250,000
$345,800, plus 41 percent of the excess of such amount over $1,000,000.
Over $1,250,000 but not over $1,500,000
$448,300, plus 43 percent of the excess of such amount over $1,250,000.
Over $1,500,000 but not over $2,000,000
$555,800, plus 45 percent of the excess of such amount over $1,500,000.
Over $2,000,000 but not over $2,500,000
$780,800, plus 49 percent of the excess of such amount over $2,000,000.
Over $2,500,000
$1,025,800, plus 50% of the excess over $2,500,000.
(2) Phasedown of maximum rate of tax.–
(A) In general.–In the case of estates of decedents dying, and gifts made, in calendar years after 2002 and before 2010, the tentative tax under this subsection shall be determined by using a table prescribed by the Secretary (in lieu of using the table contained in paragraph (1)) which is the same as such table; except that–
(i) the maximum rate of tax for any calendar year shall be determined in the table under subparagraph (B), and
(ii) the brackets and the amounts setting forth the tax shall be adjusted to the extent necessary to reflect the adjustments under subparagraph (A).
(B) Maximum rate.–
In calendar year:
The maximum rate is:
2003
49 percent
2004
48 percent
2005
47 percent
2006
46 percent
2007, 2008, and 2009
45 percent.
§ 20.2031-1 Definition of gross estate; valuation of property.
(b) Valuation of property in general. The value of every item of property includible in a decedent’s gross estate under sections 2031 through 2044 is its fair market value at the time of the decedent’s death, except that if the executor elects the alternate valuation method under section 2032, it is the fair market value thereof at the date, and with the adjustments, prescribed in that section. The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate. Thus, in the case of an item of property includible in the decedent’s gross estate, which is generally obtained by the public in the retail market, the fair market value of such an item of property is the price at which the item or a comparable item would be sold at retail. For example, the fair market value of an automobile (an article generally obtained by the public in the retail market) includible in the decedent’s gross estate is the price for which an automobile of the same or approximately the same description, make, model, age, condition, etc., could be purchased by a member of the general public and not the price for which the particular automobile of the decedent would be purchased by a dealer in used automobiles. Examples of items of property which are generally sold to the public at retail may be found in §§ 20.2031-6 and 20.2031-8. The value is generally to be determined by ascertaining as a basis the fair market value as of the applicable valuation date of each unit of property. For example, in the case of shares of stock or bonds, such unit of property is generally a share of stock or a bond. Livestock, farm machinery, harvested and growing crops must generally be itemized and the value of each item separately returned. Property shall not be returned at the value at which it is assessed for local tax purposes unless that value represents the fair market value as of the applicable valuation date. All relevant facts and elements of value as of the applicable valuation date shall be considered in every case. The value of items of property which were held by the decedent for sale in the course of a business generally should be reflected in the value of the business. For valuation of interests in businesses, see § 20.2031-3. See § 20.2031-2 and §§ 20.2031-4 through 20.2031-8 for further information concerning the valuation of other particular kinds of property. For certain circumstances under which the sale of an item of property at a price below its fair market value may result in a deduction for the estate, see paragraph (d)(2) of § 20.2053-3.
§ 20.2033-1 Property in which the decedent had an interest.
(a) In general. The gross estate of a decedent who was a citizen or resident of the United States at the time of his death includes under section 2033 the value of all property, whether real or personal, tangible or intangible, and wherever situated, beneficially owned by the decedent at the time of his death. (For certain exceptions in the case of real property situated outside the United States, see paragraphs (a) and (c) of § 20.2031-1.) Real property is included whether
fe or a term of years, or any remainder or reversionary interest shall be determined–
(1) under tables prescribed by the Secretary, and
(2) by using an interest rate (rounded to the nearest 2/10 ths of 1 percent) equal to 120 percent of the Federal midterm rate in effect under section 1274(d)(1) for the month in which the valuation date falls.
If an income, estate, or gift tax charitable contribution is allowable for any part of the property transferred, the taxpayer may elect to use such Federal midterm rate for either of the 2 months preceding the month in which the valuation date falls for purposes of paragraph (2). In the case of transfers of more than 1 interest in the same property with respect to which the taxpayer may use the same rate under paragraph (2), the taxpayer shall use the same rate with respect to each such interest.
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Assignment 3
2035. Adjustments for certain gifts made within 3 years of decedent’s death
(a) Inclusion of certain property in gross estate.–If–
(1) the decedent made a transfer (by trust or otherwise) of an interest in any property, or relinquished a power with respect to any property, during the 3-year period ending on the date of the decedent’s death, and
(2) the value of such property (or an interest therein) would have been included in the decedent’s gross estate under section 2036, 2037, 2038, or 2042 if such transferred interest or relinquished power had been retained by the decedent on the date of his death,
the value of the gross estate shall include the value of any property (or interest therein) which would have been so included.
(b) Inclusion of gift tax on gifts made during 3 years before decedent’s death.–The amount of the gross estate (determined without regard to this subsection) shall be increased by the amount of any tax paid under chapter 12 by the decedent or his estate on any gift made by the decedent or his spouse during the 3-year period ending on the date of the decedent’s death.(c) Other rules relating to transfers within 3 years of death.–
(1) In general.–For purposes of–
(A)section 303(b) (relating to distributions in redemption of stock to pay death taxes),
(B)section 2032A (relating to special valuation of certain farms, etc., real property), and
(C) subchapter C of chapter 64 (relating to lien for taxes),
the value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, during the 3-year period ending on the date of the decedent’s death.
(3) Marital and small transfers.–Paragraph (1) shall not apply to any transfer (other than a transfer with respect to a life insurance policy) made during a calendar year to any donee if the decedent was not required by section 6019 (other than by reason of section 6019(2)) to file any gift tax return for such year with respect to transfers to such donee.
