§2053 — Title 26 Internal Revenue Code | U.S. Code

Summary

When figuring the federal estate tax (the tax under section 2001), the taxable estate is reduced by certain costs. You can subtract funeral costs, the costs to run the estate, valid claims against the estate, and unpaid mortgages or debts on property that was counted in the gross estate. The estate can also deduct similar administration costs for property not open to claims if those costs are paid before the time limit for tax assessment under section 6501. Claims, mortgages, or debts that come from a promise must be genuine and based on fair payment to be deductible, except that promises to give to public, charitable, or religious donees (the kind covered by section 2055) are limited the same way those charitable bequests would be. You cannot deduct income taxes on income received after death, property taxes not due before death, estate/succession/legacy/inheritance taxes, claims by a remainderman about certain property (section 2044), or interest under section 6601 on estate tax payments while an extension under section 6166 is in effect. Deductions cannot be bigger than the value, at death, of the property that would legally pay those claims, unless the amounts were actually paid before the estate tax return filing date. An executor may instead elect, before the assessment time limit, to deduct foreign death taxes actually paid on property in another country that was transferred for public, charitable, or religious uses; that election must follow Treasury rules, must benefit only those public/charitable/religious recipients, and waives any claim for a foreign-death-tax treaty credit. See section 2043(b)(2) for how giving up marital rights can count as money’s worth.

Title 26, §2053

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(a)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,

(b)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)(1)(A)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)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)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.

(D)No deduction shall be allowed under this section for any interest payable under section 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)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)(1)Notwithstanding the provisions of subsection (c)(1)(B), 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 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 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 election under this paragraph shall be exercised in accordance with regulations prescribed by the Secretary.

(2)No deduction shall be allowed under paragraph (1) for 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 section 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 section 2055 and 2106(a)(2) are required to pay.

(3)(A)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)See section 2014(f) for the effect of a deduction taken under this paragraph on the credit for foreign death taxes.

(e)For provisions treating certain relinquishments of marital rights as consideration in money or money’s worth, see section 2043(b)(2).

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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 subpar. (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 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).

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)

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.—The

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made by this section [amending this section and section 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

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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 judicata), 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 AmendmentAmendment 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.

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of 1997 AmendmentAmendment by section 503(b)(1) of Pub. L. 105–34 applicable to estates of decedents dying after Dec. 31, 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 applicable to estates of decedents dying after Dec. 31, 1996, see section 1073(c) of Pub. L. 105–34, set out as an

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of Repeal note under section 4980A of this title.

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of 1988 AmendmentAmendment 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 AmendmentAmendment 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. Pub. L. 98–369, div. A, title X, § 1027(c),

July 18, 1984, 98 Stat. 1032, provided that: “The

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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

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of 1981 Amendment note set out under section 2056 of this title].”

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of 1976 AmendmentAmendment 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

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made by the preceding sections of this Act [amending this section and section 2011 and 2014 of this title] shall apply with respect to the estates of decedents dying on or after July 1, 1955.”

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of 1958 AmendmentAmendment 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.

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of 1956 AmendmentAct Feb. 20, 1956, ch. 63, § 4, 70 Stat. 25, as amended by act Oct. 22, 1986, Pub. L. 99–514, § 2, 100 Stat. 2095, provided that: “The

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to the Internal Revenue Code of 1986 [formerly I.R.C. 1954] made by section 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.”

§2053 Expenses, indebtedness, and taxes

Summary

Title 26, §2053

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