§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 determined 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 indebtedness 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 determining 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 limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money's worth; except 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 deduction 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. This subparagraph shall not apply to any increase in the tax imposed by this chapter by reason of section 4980A(d).

(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 described in section 2044.

(2) Limitations applicable only to subsection (a)

In the case of the amounts described in subsection (a), there shall be disallowed the amount by which the deductions specified therein exceed the value, at the time of the decedent's death, of property subject to claims, except to the extent that such deductions represent amounts paid before the date prescribed for the filing of the estate tax return. For purposes of this section, the term "property subject 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 settlement 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 State and foreign death taxes

(1) General rule

Notwithstanding the provisions of subsection (c)(1)(B) of this section, for purposes of the tax imposed 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 accordance with regulations prescribed by the Secretary) of-

(A) Any estate, succession, legacy, or inheritance tax imposed by a State or the District of Columbia upon a transfer by the decedent for public, charitable, or religious uses described in section 2055 or 2106(a)(2), and

(B) any estate, succession, legacy, or inheritance tax imposed by and actually paid to any foreign country, in respect of any property 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 religious uses described in section 2055.

The determination under subparagraph (B) 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 election 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 paragraph (1) for a State death tax or a foreign death tax specified therein unless the decrease in the tax imposed by section 2001 which results from the deduction provided in paragraph (1) will inure solely for the benefit of the public, charitable, or religious transferees described in section 2055 or section 2106(a)(2). In any case where the tax imposed by section 2001 is equitably apportioned 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 deductions allowed by this chapter), in determining such decrease, there shall be disregarded any decrease in the Federal estate tax which any transferees other than those described in sections 2055 and 2106(a)(2) are required to pay.

(3) Effect on credits for State and 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 credit, against the Federal estate tax, under a death tax convention with any foreign country for any tax or portion thereof in respect of which a deduction is taken under this subsection.

(B) Cross references

See section 2011(e) for the effect of a deduction taken under this subsection on the credit for State death taxes, and see section 2014(f) for the effect of a deduction taken under this subsection 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 ; Sept. 2, 1958, Pub. L. 85–866, title I, §102(c)(3), 72 Stat. 1674 ; Aug. 21, 1959, Pub. L. 86–175, §1, 73 Stat. 396 ; Oct. 4, 1976, Pub. L. 94–455, title XIX, §§1902(a)(12) (B), 1906(b)(13)(A), 90 Stat. 1806 , 1834; July 18, 1984, Pub. L. 98–369, div. A, title IV, §425(a)(2), title X, §1027(b), 98 Stat. 804 , 1031; Nov. 10, 1988, Pub. L. 100–647, title I, §1011A(g)(11), 102 Stat. 3482 .)

Amendments

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 relinquishment of marital rights shall not be deemed a consideration '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 exercise of privilege of election, added par. (2) and sentence for determining location of property, redesignated provisions 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 Columbia,".

1956-Subsecs. (d), (e). Act Feb. 20, 1956, added subsec. (d) and redesignated former subsec. (d) as (e).

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 applicable 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.

Section 1027(c) of Pub. L. 98–369 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 amendment made by section 403 of the Economic Recovery Tax Act of 1981 [section 403 of Pub. L. 97–34, see Effective Date of 1981 Amendment note set out under section 2056 of this title]."

Effective Date of 1959 Amendment

Section 4 of Pub. L. 86–175 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 2011 of this title.

Effective Date of 1956 Amendment

Section 4 of act Feb. 20, 1956, as amended by act Oct. 22, 1986, Pub. L. 99–514, §2, 100 Stat. 2095 , provided 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 included in chapter 3 of the Internal Revenue Code of 1939, shall apply to the estates of all decedents dying after December 31, 1953."

Cross References

Computation of adjusted gross estate, see section 2056 of this title.

Credit for tax on prior transfers, see section 2013 of this title.

Income tax, special rules for credits and deductions, see section 642 of this title.

Medical care deductions of decedents for income tax purposes, effect of allowance under this section, see section 213 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 sections 213, 303, 642, 2011, 2013, 2014, 2032A, 2043, 2106, 2622, 6166, 7481 of this title.