PART IV-SUPPLEMENTAL PROVISIONS

SUPPLEMENT A.-ASSESSMENT AND COLLECTION OF DEFICIENCIES

(a) if the transferee is an organization exempt from income tax under section 103; or

(b) if prior to the transfer it has been established to the satisfaction of the Commissioner that such transfer is not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income taxes. (June 6, 1932, c. 209, § 902, 47 Stat. 284.)

Sec. 352. Definition of "foreign trust ".-A trust shall be considered a foreign trust within the meaning of this chapter if, assuming a subsequent sale by the trustee, outside the United States and for cash, of the property so transferred, the profit, if any, from such sale would not be included in the gross income of the trust under chapter 1. (June 6, 1932, c. 209, § 903, 47 Stat. 285.)

Sec.

470. Definition of deficiency.
471. Procedure in general.
472. Jeopardy assessments.
473. Claims in abatement.

474. Period of limitation upon assessment and collection.
475. Suspension of running of statute.
476. Cross reference.

SUPPLEMENT B-INTEREST, ADDITIONS TO THE TAX, AND PENALTIES
490. Interest on extended payments.
491. Interest on deficiencies.

492. Interest on jeopardy assessments.
493. Additions to the tax in case of nonpayment.
494. Penalties.

SUPPLEMENT C-CLAIMS AGAINST TRANSFEREES AND FIDUCIARIES 500. Transferred assets.

Sec. 353. Payment and collection.-(a) The tax imposed by 495. Cross reference. section 350 shall, without assessment or notice and demand, be due and payable by the transferor at the time of the transfer, and shall be assessed, collected, and paid under regulations prescribed by the Commissioner with the approval of the Secretary.

(b) Under regulations prescribed by the Commissioner with the approval of the Secretary the tax may be abated, remitted, or refunded if after the transfer it has been established to the satisfaction of the Commissioner that such transfer was not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income taxes.

(c) All administrative, special, or stamp provisions of law, including penalties and including the law relating to the assessment of taxes, so far as applicable, shall be extended to and made a part of this chapter. (June 6, 1932, c. 209, § 904, 47 Stat. 285.)

501. Notice of fiduciary relationship.

SUPPLEMENT D-REFUNDS
510. Period of limitation for filing claims.
511. Effect of petition to board.
512. Overpayment found by board.
513. Cross references.

SUPPLEMENT E-ESTATES IN CHINA

520. Payment of tax.

521. Authority of clerk of United States Court for China to act as collector.

SUPPLEMENT F-EXTENSION OF PAYMENT IN CASE OF FUTURE INTERESTS 525. Period of extension.

526. Requirements for extension.
527. Credit for State death taxes.

SUPPLEMENT G-DEFINITIONS

530. "Executor." "Net estate," "Month," "Collector."
531. Cross references.

SUBCHAPTER B-ADDITIONAAL ESTATE TAX

535. Rate of tax.

536. Credits against tax.

537. Assessment, collection, and payment of tax.

Subchapter A-BASIC ESTATE TAX.

PART I.-INTRODUCTORY PROVISIONS

Sec. 400. Application of subchapter. The provisions of this subchapter shall apply to the estates of decedents dying after 5 P. M., June 6, 1932. Estate taxes in the case of decedents dying prior to 5 P. M., June 6, 1932, shall not be affected by the provisions of this subchapter, but shall remain subject to the applicable provisions of the revenue act of 1926 and prior revenue acts, except as such provisions are modified by legislation enacted subsequent thereto.

Sec. 401. Classification of provisions.-The provisions of this subchapter are herein classified and designated as

Part I-Introductory provisions.

Part II-Residents.

Part III-Nonresidents.

Part IV-Supplemental provisions.

Sec. 402. Application of parts.-Part II shall apply to the estates of residents; and, except as otherwise provided therein, to the estates of nonresidents subject to the exceptions and additional provisions contained in Part III. Part IV shall apply to the estates both of residents and nonresidents.

PART II.-ESTATES OF RESIDENTS

SUBPART I. COMPUTATION OF TAX

Sec. 410. Rate of tax.-A tax equal to the sum of the following percentages of the value of the net estate (determined as provided in sections 411 and 412) shall be imposed upon the

transfer of the net estate of every decedent, resident of the | for any period not ascertainable without reference to his death United States, dying after 5 P. M., June 6, 19321 or for any period which does not in fact end before his death (1) 1 per centum of the amount of the net estate not in excess of the possession or enjoyment of, or the right to the income from, $50,000; the property, or (2) the right, either alone or in conjunction 2 per centum of the amount by which the net estate exceeds with any person, to designate the persons who shall possess or $50,000 and does not exceed $100,000;

enjoy the property or the income therefrom: except in case of a 3 per centum of the amount by which the net estate exceeds bona fide sale for an adequate and full consideration in money $100,000 and does not exceed $200,000;

or money's worth. Any transfer of a material part of his 4 per centum of the amount by which the net estate exceeds property in the nature of a final disposition or distribution $200,000 and does not exceed $400,000;

thereof, made by the decedent within two years prior to his

5 per centum of the amount by which the net estate exceeds death without such consideration, shall, unless shown to the $400,000 and does not exceed $600,000;

contrary, be deemed to have been made in contemplation of

6 per centum of the amount by which the net estate exceeds death within the meaning of this subchapter; (Feb. 26, 1926, c. $600,000 and does not exceed $800,000; 27, § 302 (c), as amended by June 6, 1932, c. 209, § 803 (a), 47

7 per centum of the amount by which the net estate exceeds Stat. 279.) $800,000 and does not exceed $1,000,000;

(d) Revocable transfers.-To the extent of any interest 8 per centum of the amount by which the net estate exceeds therein of which the decedent has at any time made a transfer, $1,000,000 and does not exceed $1,500,000; by trust or otherwise, where the enjoyment thereof was sub

9 per centum of the amount by which the net estate exceeds ject at the date of his death to any change through the exercise $1,500,000 and does not exceed $2,000,000; of a power, either by the decedent alone or in conjunction with 10 per centum of the amount by which the net estate exceeds any person, to alter, amend, or revoke, or where the decedent $2,000,000 and does not exceed $2,500,000; relinquished any such power in contemplation of his death, ex

11 per centum of the amount by which the net estate exceeds cept in case of a bona fide sale for an adequate and full consid$2,500,000 and does not exceed $3,000,000; eration in money or money's worth. The relinquishment of

12 per centum of the amount by which the net estate exceeds any such power, not admitted or shown to have been in con$3,000,000 and does not exceed $3,500,000;

13 per centum of the amount by which the net estate exceeds $3,500,000 and does not exceed $4,000,000;

templation of the decedent's death, made within two years prior to his death, without such a consideration and affecting the interest or interests (whether arising from one or more trans

14 per centum of the amount by which the net estate exceeds fers or the creation of one or more trusts) of any one bene$4,000,000 and does not exceed $5,000,000; ficiary of a value or aggregate value, at the time of such

15 per centum of the amount by which the net estate exceeds death, in excess of $5,000, then, to the extent of such excess, $5,000,000 and does not exceed $6,000,000;

16 per centum of the amount by which the net estate exceeds $6,000,000 and does not exceed $7,000,000;

17 per centum of the amount by which the net estate exceeds $7,000,000 and does not exceed $8,000,000;

18 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $9,000,000;

19 per centum of the amount by which the net estate exceeds $9,000,000 and does not exceed $10,000,000;

20 per centum of the amount by which the net estate exceeds $10,000,000. (Feb. 26, 1926, c. 27, § 301 (a), 44 Stat. 69.)

Sec. 411. Gross estate. The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated-

such relinquishment or relinquishments shall be deemed and held to have been made in contemplation of death within the meaning of this chapter;

(e) Joint interests.-To the extent of the interest therein held as joint tenants by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money's worth: Provided, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such

(a) Decedent's interest.-To the extent of the interest | other person from the decedent for less than an adequate and therein of the decedent at the time of his death;

(b) Dower or curtesy interests.-To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy; (Feb. 26, 1926, c. 27, § 302 (a), (b), 44 Stat. 70.)

(c) Transfers in contemplation of death.-To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death, or of which he has at any time made a transfer, by trust or otherwise, under which he has retained for his life or

1" In lieu of the tax imposed by Title III of the Revenue Act of 1924" appears at the beginning of section 301 (a) of the Revenue Act of 1926. "Shall be imposed upon the transfer of the net estate of every decedent resident of the United States dying after 5 P. M., June 6, 1932" is substituted for "is hereby imposed upon the transfer of the net estate of every decedent dying after the enactment of this Act, whether a resident or non-resident of the United States". The enactment date of the Revenue Act of 1932 is used in lieu of that of the Revenue Act of 1926 in conformity with section 400, above. The

reference to nonresident is omitted here as the tax on estates of nonresident decedents is provided for in section 460.

full consideration in money or money's worth, there shall be
excepted only such part of the value of such property as is
proportionate to the consideration furnished by such other per-
son: Provided further, That where any property has been ac-
quired by gift, bequest, devise, or inheritance, as a tenancy by
the entirety by the decedent and spouse, then to the extent of
one-half of the value thereof, or, where so acquired by the
decedent and any other person as joint tenants and their in-
terests are not otherwise specified or fixed by law, then to the
extent of the value of a fractional part to be determined by
dividing the value of the property by the number of joint
tenants (Feb. 26, 1926, c. 27, § 302 (d), (c), 44 Stat. 71);
(f) Property passing under general power of appointment.—
To the extent of any property passing under a general power
of appointment exercised by the decedent (1) by will, or
(2) by deed executed in contemplation of or intended to take
effect in possession or enjoyment at or after his death, or
(3) by deed under which he has retained for his life or any
period not ascertainable without reference to his death or for
any period which does not in fact end before his death (A) the

2" But after the enactment of this Act" is omitted. See section 400.

possession or enjoyment of, or the right to the income from, | estate created in lieu of dower or curtesy, or of other marital the property, or (B) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom; except in case of a bona fide sale for an adequate and full consideration in money or money's worth; and (Feb. 26, 1926, c. 27, § 302 (f) as amended by June 6, 1932, c. 209, § 803 (b), 47 Stat. 279)

(g) Proceeds of life insurance. To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life.

(h) Prior interests.-Except as otherwise specifically provided therein, subsections (b), (c), (d), (e), (f), and (g) shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whether made, created, arising, existing, exercised, or relinquished before or after June 6, 1932.3

(i) Transfers for insufficient consideration.-If any one of the transfers, trusts, interests, rights, or powers, enumerated and described in subsections (c), (d), and (f) is made, created, exercised, or relinquished for a consideration in money or money's worth, but is not a bona fide sale for an adequate and full consideration in money or money's worth, there shall be included in the gross estate only the excess of the fair market value at the time of death of the property otherwise to be included on account of such transaction, over the value of the consideration received therefor by the decedent. (Feb. 26, 1926, c. 27, § 302 (g) to (i), 44 Stat. 70–71.)

Sec. 412. Net estate. For the purpose of the tax the value of the net estate shall be determined, in the case of a resident by deducting from the value of the gross estate

rights in the decedent's property or estate, shall not be con sidered to any extent a consideration "in money or money's worth". (Feb. 26, 1926, c. 27, § 303 (a) (1) as amended by June 6, 1932, c. 209, § 805, 47 Stat. 280; Feb. 26, 1926, c. 27, § 303 (d) as amended by June 6, 1932, c. 209, § 804, 47 Stat. 280.) (c) Property previously taxed.-An amount equal to the value of any property (A) forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent, or (B) transferred to the decedent by gift within five years prior to his death, where such property can be identified as having been received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received. This deduction shall be allowed only where a gift tax imposed under chapter 4, or an estate tax imposed under this subchapter, the Revenue Act of 1926, or any prior Act of Congress, was finally determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the amount finally determined as the value of such property in determining the value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedent's gross estate. Where a deduction was allowed of any mortgage or other lien in determining the gift tax, or the estate tax of the prior decedent, which was paid in whole or in part prior to the decedent's death, then the deduction allowable under this paragraph shall be reduced by the amount so paid. The deduction allowable under this subsection shall be reduced by an amount which bears the same ratio to the amounts allowed as deductions under subsections (a), (b) and (d) as the amount otherwise deductible under this subsection bears to the

(a) $100,000.-An exemption of $100,000 (Feb. 26, 1926, c. 27, value of the decedent's gross estate. Where the property re

§ 303 (a) (4), 44 Stat. 73);

(b) Expenses, losses, indebtedness,

amounts

(1) for funeral expenses,

(2) for administration expenses,

ferred to in this subsection consists of two or more items the and taxes. Such aggregate value of such items shall be used for the purpose of

(3) for claims against the estate, (4) for unpaid mortgages upon, or any indebtedness in respect to, property where the value of decedent's interest therein, undiminished by such mortgage or indebtedness, is included in the value of the gross estate, and

computing the deduction. (Feb. 26, 1926, c. 27, § 303 (a) (2) as
amended by June 6, 1932, c. 209, § 806 (a), 47 Stat. 281.)
(d) Transfers for public, charitable, and religious uses.-
The amount of all bequests, legacies, devises, or transfers, to or
for the use of the United States, any State, Territory, any politi-
cal subdivision thereof, or the District of Columbia, for exclu-
sively public purposes, or to or for the use of any corporation
organized and operated exclusively for religious, charitable,
scientific, literary, or educational purposes, including the en-

(5) reasonably required and actually expended for the
support during the settlement of the estate of those de-couragement of art and the prevention of cruelty to children or
pendent upon the decedent,

as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or property taxes not accrued before his death, or any estate, succession, legacy, or inheritance taxes. The deduction herein allowed in the case of claims against the estate, unpaid mortgages, or any indebtedness shall, when founded upon 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. There shall also be deducted losses incurred during the settlement of estates arising from fires, storms, shipwrecks, or other casualties, or from theft, when such losses are not compensated for by insurance or otherwise, and if at the time of the filing of the return such losses have not been claimed as a deduction for income tax purposes in an income tax return. For the purposes of this subchapter, a relinquishment or promised relinquishment of dower, curtesy, or of a statutory

* See note 1.

136500°-32-28

animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or 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 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. If the tax imposed by section 410, or any estate, succession, legacy, or inheritance taxes, are, either by the terms of the will, by the law of the jurisdiction under which the estate is administered, or by the law of the jurisdiction imposing the particular tax, payable in whole or in part out of the bequests, legacies, or devises otherwise deductible under this paragraph, then the amount deductible under this paragraph shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes. The amount of the deduction under this subsection for any transfer shall not exceed the value of the transferred property required to be included in the gross estate. (Feb. 26, 1926, c. 27, § 303 (a) (3), 44 Stat. 72, as amended by June 6, 1932, c. 209, § 807, 47 Stat. 282.)

(2) Revenue Act of 1932.—(A) If a tax has been paid under chapter 4 on a gift, and thereafter upon the death of the donor any amount in respect of such gift is required to be included in the value of the gross estate of the decedent for the purposes of chapter 3, then there shall be credited against the tax imposed by section 410 the amount of the tax paid under chapSUBPART II.-RETURNS AND PAYMENT OF TAX ter 4 with respect to so much of the property which constituted Sec. 420. Executor's notice. The executor, within two months the gift as is included in the gross estate, except that the after the decedent's death, or within a like period after qualiamount of such credit shall not exceed an amount which bearsfying as such, shall give written notice thereof to the collec

specific exemption) for such year. (Feb. 26, 1926, c. 27, § 301, part of such information as may at the time be ascertainable

district in which was the domicile of such decedent at the time, such application, or, if the application is made before the of his death. (Feb. 26, 1926, c. 27, §§ 300 (d), 304 (a), 44 return is filed, then within one year after the return is filed, Stat. 69, 74.)

(d) Records, statements, and returns.-Every person liable to any tax imposed by this subchapter, or for the collection thereof, shall keep such records, render under oath such statements, make such returns, and comply with such rules and regulations, as the Commissioner, with the approval of the Secretary, may from time to time prescribe. (Feb. 26, 1926, c. 27, § 1102 (a), 44 Stat. 112.)

(e) Cross references.-For general provisions relating to returns, see the following sections

(1) Notice requiring records, statements, and special returns, section 1503.

(2) Returns executed by taxpayer, section 1511.

but not after the expiration of the period prescribed for the assessment of the tax in sections 474 and 475) shall notify the executor of the amount of the tax. The executor, upon payment of the amount of which he is notified, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge. (Feb. 26, 1926, c. 27, § 313 (b), 44 Stat. 79.)

For continuance of lien upon the gross estate after discharge of executor, see section 427.

Sec. 426. Collection of unpaid tax-(a) Sale of property.If the tax herein imposed is not paid on or before the due date thereof the collector shall, upon instruction from the Commis(3) Returns executed by Commissioner or collector, section sioner, proceed to collect the tax under the provisions of general 1512. law, or commence appropriate proceedings in any court of the (4) Verification and making of returns by Commissioner, United States having jurisdiction, in the name of the United section 1514.

States, to subject the property of the decedent to be sold under (5) Summons from collector to produce books and give testi- the judgment or decree of the court. From the proceeds of mony, section 1515.

(6) Restrictions on examination of taxpayers, section 1521. (7) Authority to administer oaths, take testimony, and certify, section 1522.

(8) Extension of time of filing returns, section 1524. Sec. 422. Payment of tax-(a) Time of payment(1) General rule. The tax imposed by this subchapter shall be due and payable one year after the decedent's death. (Feb. 26, 1926, c. 27, § 305 (a), 44 Stat. 74.)

such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. This subsection in so far as it applies to the collection of a deficiency shall be subject to the provisions of sections 471 and 491. (Feb. 26, 1926, c. 27, § 314 (a), 44 Stat. 79.)

(b) Reimbursement out of estate. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the

to reimbursement out of any part of the estate still undistributed or by a just and equitable contribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this subchapter that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. (Feb. 26, 1926, c. 27, § 314 (b), 44 Stat. 79.)

(2) Extension of time.-Where the Commissioner finds that the payment on the due date of any part of the amount determined by the executor as the tax would impose undue hard-executor in his capacity as such, such person shall be entitled ship upon the estate, the Commissioner may extend the time for payment of any such part not to exceed eight years from the due date. In such case the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension, and the running of the statute of limitations for assessment and collection, as provided in section 474, shall be suspended for the period of any such extension. If an extension is granted, the Commissioner may require the executor to furnish a bond in such amount, not exceeding double the amount in respect of which the extension is granted, and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the amount in respect of which the extension is granted in accordance with the terms of the extension. (Feb. 26, 1926, c. 27, § 305 (b) as amended by June 6, 1932, c. 209, § 808 (a), 47 Stat. 282.)

(c) Liability of life insurance beneficiaries.-If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net

(3) Cross reference. For extension of time in case of future estate. If there is more than one such beneficiary the executor interests, see Supplement F.

(b) Liability for payment.-The tax imposed by this subchapter shall be paid by the executor to the collector. (Feb. 26, 1926, c. 27, § 305 (a), 44 Stat. 74.)

Sec. 423. Duplicate receipts.-The collector shall grant to the person paying the tax duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdiction to audit or settle his accounts. (Feb. 26, 1926, c. 27, § 313 (a), 44 Stat. 79.)

shall be entitled to recover from such beneficiaries in the same ratio. (Feb. 26, 1926, c. 27, § 314 (b), 44 Stat. 79.)

Sec. 427. Lien for tax-(a) Upon gross estate.-Unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regu

Sec. 424. Examination of return and determination of tax.—lations prescribed by him with the approval of the Secretary, As soon as practicable after the return is filed the Commissioner shall examine it and shall determine the correct amount of the tax. (Feb. 26, 1926, c. 27, § 306, 44 Stat. 74.)

Sec. 425. Discharge of executor from personal liability.-If the executor makes written application to the Commissioner for determination of the amount of the tax and discharge from personal liability therefor, the Commissioner (as soon as possible, and in any event within one year after the making of

issue his certificate, releasing any or all property of such estate from the lien herein imposed. (Feb. 26, 1926, c. 27, § 315 (a), 44 Stat. 80 as amended by May 29, 1928, c. 852, § 613 (b), 45 Stat. 876 and June 6, 1932, c. 209, § 809, 47 Stat. 283.)

(b) Upon property of transferee.-If (1) except in the case of a bona fide sale for an adequate and full consideration in money or money's worth, the decedent makes a transfer, by trust or otherwise, of any property in contemplation of or in