26 CFR 20.2014-7 – Limitation on credit if a deduction for foreign death taxes is allowed under section 2053(d)
If a deduction is allowed under section 2053(d) for foreign death taxes paid with respect to a charitable gift, the credit for foreign death taxes is subject to special limitations. In such a case the property described in subparagraphs (A), (B), and (C) of paragraphs (1) and (2) of section 2014(b) shall not include any property with respect to which a deduction is allowed under section 2053(d). The application of this section may be illustrated by the following example:
Gross estate $1,200,000.00 Debts and charges $40,000.00 Bequest of U.S. corporation stock to niece 400,000.00 Bequest of country X corporation stock to nephew 100,000.00 Net Federal estate tax 136,917.88 676,917.88 Residue before country X tax 523,082.12 Country X succession tax on charity 100,000.00 Charitable deduction 423,082.12 Gross estate 1,200,000.00 Debts and charges 40,000.00 Deduction of foreign death tax under section 2053(d) 100,000.00 Charitable deduction 423,082.12 Exemption 60,000.00 623,082.12 Taxable estate 576,917.88 Gross estate tax 172,621.26 Credit for State death taxes 15,476.72 Gross estate tax less credit for State death taxes 157,144.54 Credit for foreign death taxes 20,226.66 Net Federal estate tax 136,917.88 Succession tax on nephew: Value of stock of country X corporation 100,000 Tax (50% rate) $50,000 Succession tax on charity: Value of stock of country X corporation 200,000 Tax (50% rate) 100,000 Value of situated in country X 300,000 Value of property in respect of which a deduction is allowed under section 2053(d) 200,000 Value of property situated within country X, subjected to tax, and included in gross estate as limited by section 2014(f) 100,000